Rental income tax in Kenya: a landlord's guide to MRI and filing

If you earn rent from a house, apartment or bedsitter in Kenya, KRA expects tax on it. The rules have changed several times in recent years, so treat this as an overview and confirm the current position on the KRA website or with a tax adviser.

At the time of writing, residential rental income within the MRI bands is taxed at 7.5% of gross rent. Rates and thresholds are set by Finance Acts and change, so always check the current figures with KRA.

Monthly rental income (MRI) tax

MRI is a simplified tax on residential rental income. Resident landlords whose annual residential rent falls within the bands set by law pay a flat percentage of the gross rent received each month. Because it is a final tax on gross rent, you do not deduct expenses such as repairs or loan interest.

• Who: resident individuals and companies earning residential rental income within the MRI thresholds.
• On what: gross rent received, not profit.
• When: filed and paid monthly on iTax, by the deadline KRA sets for the following month.

Landlords whose residential rent is above the upper threshold, or who opt out where the law allows, are taxed under the normal income tax rules, where allowable expenses can be deducted.

Commercial rental income

Rent from offices, shops and warehouses is not covered by MRI. It is taxed as business income under the normal income tax rules, and may also attract VAT depending on the landlord's turnover and registration. Tenants that are designated withholding agents may withhold tax on rent paid.

How to file MRI on iTax

1. Log in to iTax with your KRA PIN.
2. Make sure the rental income obligation is registered on your PIN.
3. Go to the return filing menu and choose the monthly rental income return.
4. Enter each property and the rent received for the month.
5. Generate the payment slip and pay through the listed banks or mobile money.

Keep good records

Keep tenancy agreements, rent receipts and bank statements for every property. They support your returns and help if KRA asks questions.

Frequently asked questions

What is the rental income tax rate in Kenya?

At the time of writing, residential rental income within the MRI bands is taxed at 7.5% of gross rent. Confirm the current rate with KRA before filing.

Do I pay rental income tax if I rent out one room?

Rent from letting residential property is generally taxable. If your total rent is within the MRI bands, MRI applies. Check KRA guidance for your situation.

Can I deduct expenses from MRI?

No. MRI is charged on gross rent. Landlords taxed under normal income tax rules can deduct allowable expenses.