The Kenya Revenue Authority (KRA) has clarified that landlords earning less than Ksh288,000 a year from residential rentals are exempt from monthly rental income tax.
In its 2026/2027 rental income tax guide released on Monday, October 19, the taxman outlined the categories of landlords required to pay the tax and those who do not fall under the monthly rental income tax regime.
“Landlords who earn rental income which is less than Ksh288,000 per year are exempt from Monthly Rental Income (MRI) Tax,” KRA stated.
This means landlords collecting less than Ksh24,000 per month in residential rent are exempt from the tax.
Landlords earning more than Ksh15 million annually from rental properties are also excluded from the monthly rental income tax regime.
KRA further clarified that the tax does not apply to income earned from commercial properties such as shops and offices under the current system.
Landlords to pay 7.5 per cent of gross rent
Landlords who do not fall under the exempt categories are required to pay monthly rental income tax at a rate of 7.5 per cent of their gross rental income.
The rate took effect on January 1, 2024.
Under the system, landlords cannot deduct expenses incurred in managing or maintaining their properties before calculating the tax payable.
“No expenses, losses or capital deductions are allowed for deduction from the gross rent,” KRA explained.
This means the tax is calculated on the total rent collected rather than the amount remaining after expenses.
The Authority also stated that the Affordable Housing Levy, charged at 1.5 per cent of gross rental income, applies to eligible landlords.
Non-resident landlords face separate tax rate
KRA also outlined the tax requirements for non-residents earning rental income from properties in Kenya.
Under the other separate tax system which came into effect on July 1, 2026, non-resident landlords must pay 30 per cent of the total rental income received.
This applies to both residential and commercial property such as houses, shops, and offices.
Rental tax return deadline
For those who are supposed to pay rental tax every month, their tax return should be filed before the 20th of the following month.
For instance, if one earns rental income in the month of September, then he or she should file his or her return and pay the tax by October 20.
According to KRA, those who file their return after the deadline will be subjected to Ksh2,000 penalty or 5 per cent of the tax payable, whichever is higher, for individuals.
Failure to pay the tax will result in a penalty of five per cent of the unpaid tax.
It advised that one should comply with the tax regulations and pay the tax every month without fail.
