Rental Income Tax in Kenya: The Landlord’s Guide

How MRI Works

Residential rent in Kenya is taxed under Monthly Rental Income (MRI), a final tax of 7.5% on the gross rent you receive. The rate fell from 10% to 7.5% on 1 January 2024. Because it is a final tax, no expenses, losses or capital allowances are deductible; the 7.5% is charged on the full rent before any costs.

MRI applies to resident landlords, both individuals and companies, whose residential rental income is more than KES 280,000 and not more than KES 15 million in a year.

• Rate: 7.5% of gross rent received (down from 10% before 2024)
• A final tax, with no expense, loss or capital deductions
• For resident landlords earning KES 280,000 to 15 million a year
• Charged on rent received, not on profit

Who Pays MRI

Earn KES 280,000 or less from residential rent in a year and you fall outside MRI; that income is handled under the normal income-tax rules instead. Earn more than KES 15 million and you also leave MRI, declaring the rent in your annual income tax return at the normal rates alongside your other income.

MRI covers residential property only. Commercial rent is declared in your annual income tax return, where normal expenses are deductible, and it attracts 16% VAT once your turnover reaches KES 5 million. A landlord with both residential and commercial units runs both regimes at once.

Non-resident landlords are outside MRI too: their rent is subject to 30% withholding tax as a final tax, deducted by the tenant. KRA can also appoint rental income tax agents, usually property managers, to deduct MRI at source and remit it for you. Short-let or furnished (Airbnb-style) lettings and jointly owned property are treated differently, so confirm your exact position with an accountant.

Filing and Paying on eRITS

MRI is filed every month. The return and payment are due on or before the 20th of the following month, so rent received in January is declared and paid by 20 February.

You must file a NIL return for any month you receive no rent; a skipped NIL is still a missed filing. KRA launched the Electronic Rental Income Tax System (eRITS) on 10 April 2025, built on the Gava Connect platform, to register properties, file and pay online.

Using eRITS is currently optional, you can still file MRI on iTax. But draft 2026 regulations propose making eRITS registration mandatory, with each property listed individually; they were out for public consultation in 2026, so treat compulsory registration as coming rather than settled law. Most landlords set a standing monthly routine or hand it to an accountant so the 20th never slips.

When the Standard Regime Is Better

MRI’s simplicity costs you deductions. When your expenses, mortgage interest, repairs, management and agent fees, are high relative to rent, a flat 7.5% on gross can exceed what you would pay on actual profit.

You may elect, by written notice to the Commissioner, not to be taxed under MRI. The annual income-tax regime then applies and you claim allowable expenses against the rent. An accountant models both, files the election correctly, and registers you for whichever leaves you better off.

Penalties to Avoid

The Tax Procedures Act fixes the cost of slipping. Late filing is KES 2,000 or 5% of the tax due (whichever is higher) for individuals, and KES 20,000 or 5% for companies. Late payment adds a 5% penalty plus interest of 1% per month on the unpaid tax. Because MRI is monthly, these stack up fast, and a missed NIL return still counts as a missed filing.

From January 2026, KRA also validates expenses against eTIMS. If you elect the standard regime to claim costs, those expenses generally need valid electronic invoices to be deductible, so your suppliers’ compliance now affects your tax bill. Staying current is far cheaper than catching up after an audit.