Is Rental Income Taxable in Kenya? What Landlords Must Know in 2026

Is Rental Income Taxable in Kenya?

Yes — rental income in Kenya is taxable. Many Kenyan landlords — particularly those with a single property or lower rents — are unaware of this obligation. KRA has significantly increased enforcement in recent years, using bank data, utility records, and agent reports to identify undeclared rental income.

If you receive rent from any residential or commercial property, you are legally required to declare it to KRA and pay the applicable tax.

Which Tax Rate Applies to Your Rental Income?

Kenya has two regimes for taxing rental income:

Option 1: Monthly Rental Income Tax (MRI) — Simplified

If your total monthly residential rental income is above KES 24,000 but below KES 288,000 per month (KES 3.456 million per year), you pay:

• 10% on gross rental receipts — no deductions for expenses allowed
• Filed and paid monthly by the 20th of the following month
• Available via iTax — select "Monthly Rental Income" under Returns

This is the most common option for small-to-medium landlords. It is simple: you pay 10% of whatever rent you receive, no calculations needed.

Option 2: Regular Income Tax — Annual

If your rental income exceeds KES 288,000/month (KES 3.456 million/year), or if you own commercial property, you pay income tax at regular rates (10%–35%) on net rental profit (after allowable deductions).

Allowable deductions under this option include:

• Mortgage interest on the property
• Repairs and maintenance
• Agency/property management fees
• Insurance on the property
• Land rates and rent
• Capital allowances (wear and tear on fixtures)

This option is better if you have significant deductible expenses that bring your net profit below what 10% of gross would cost you.

Is There a Threshold Below Which Rental Tax Does Not Apply?

Yes — if your monthly residential rental income is KES 24,000 or below, you are below the MRI threshold and no monthly rental tax applies. However, you must still declare this income on your annual income tax return. KRA has an exemption for very small amounts, but "I did not know" is not an accepted reason for non-declaration.

Practical Example: Three Nairobi Landlords

Landlord A: One unit at KES 25,000/month

Annual rental income: KES 300,000. MRI rate: 10%. Monthly tax: KES 2,500. Annual tax: KES 30,000. File monthly by the 20th.

Landlord B: Five units at KES 30,000 each (KES 150,000/month)

Annual rental income: KES 1,800,000. MRI rate: 10%. Monthly tax: KES 15,000. Annual tax: KES 180,000. File monthly.

Landlord C: Commercial property generating KES 400,000/month

Above MRI threshold — must use regular income tax. Net profit (after mortgage interest, maintenance, and management fees): KES 2,400,000/year. Tax at progressive rates: approximately KES 598,000. Annual filing via iTax by June 30.

How to Register and File Rental Tax on iTax

1. Log into itax.kra.go.ke
2. Go to Registration → Add Tax Obligation → Monthly Rental Income (MRI)
3. Declare your properties and expected rental income
4. Each month: go to Returns → Monthly Rental Income → File Return
5. Enter rental income received in the month
6. Pay via M-Pesa Paybill 572572 by the 20th of the following month

What Happens If You Don't Declare Rental Income?

KRA's enforcement has increased significantly. In 2025–2026, KRA deployed AI-assisted systems that cross-reference:

• Bank deposit patterns consistent with rental income
• Property records from county governments
• Utility account data showing active tenancies
• Agent listings on property platforms

Penalties for undeclared rental income include:

• 20% penalty on the undeclared tax amount
• 1% interest per month on outstanding tax from the due date
• Potential criminal prosecution for deliberate tax evasion

If you have undeclared rental income, the safest route is to approach KRA proactively. Voluntary disclosure typically results in reduced penalties — sometimes to zero if genuine. Call KRA on 0800 722 226 for guidance.

Related Tools & Guides on payecalculator.co.ke

• KRA tax calendar
• iTax