If you earn rent from residential property in Kenya, the tax treatment depends on who owns the property and how much rental income falls within the relevant regime.
For many resident landlords, KRA uses a simplified Monthly Rental Income system.
The current MRI rate
KRA currently states that Monthly Rental Income tax is charged at 7.5% of gross rent received, effective from 1 January 2024.
Under this simplified regime, expenses, losses and capital deductions are not deducted from the gross rent before applying the tax.
Always check the current KRA page before filing because tax rules can change.
See KRA’s Residential Rental Income guidance.
Who is within the regime?
KRA states that MRI applies to a resident person earning residential rental income in Kenya where annual rental income is:
- above KES 280,000
- not more than KES 15 million
A person can also elect, by notice to the Commissioner, not to use the MRI regime and instead be taxed under the annual income-tax system.
Commercial rental property and non-resident landlords are outside the simplified MRI category described by KRA.
Gross rent means before expenses
This point catches landlords who think the tax is calculated after repairs, management fees and loan interest.
Under MRI, KRA states that no expenses, losses or capital deductions are allowed against the gross rental income.
If a landlord is considering the alternative annual regime, the tax treatment is different and professional tax advice may be useful.
When is it filed and paid?
KRA says residential rental income is filed and paid on or before the 20th day of the following month.
For example, rent received in January is dealt with by 20 February.
Use iTax or the current KRA filing channel rather than relying on an old payment guide.
What counts as residential rent?
The simplified regime concerns income from the use or occupation of residential property.
Commercial property is excluded from MRI.
Mixed-use buildings can therefore need more careful treatment than a straightforward block of residential bedsitters or apartments.
Keep rent records
Even with a simplified gross-rent tax, maintain records showing:
- units
- tenants
- rent charged
- rent actually received
- payment dates
- arrears
- vacancies
- tax filings and payment references
Good records also help you evaluate whether the property itself is performing well.
Rental income is not the same as rental yield
Tax is based on the applicable tax rules.
Investment yield is an investment calculation comparing income with the price or value of the property.
Do not confuse a 7.5% tax rate with a 7.5% rental yield. They measure completely different things.
What if there is no rent in a month?
KRA’s guidance says a landlord should file a nil return for a month in which no rent is received where the MRI obligation applies.
That makes vacancy records important.
Buying an existing rental property
If you are buying a block of apartments or bedsitters, ask for evidence behind any income figure the seller gives you.
Useful records include:
- current tenancy schedule
- actual rent receipts
- arrears
- vacancies
- utility arrangements
- maintenance history
- tax records where appropriate
Do not value a property from “expected rent” without understanding what is actually being collected.
Check KRA before relying on this guide
Tax rates and thresholds can be amended by Finance Acts and regulations.
This page explains the current KRA position as of its publication date. For a live filing or a significant transaction, verify the current rules directly with KRA or a qualified tax professional.
