The Kenya Revenue Authority (KRA) has clarified rental income tax requirements for landlords, outlining who qualifies for exemptions and the rates applicable to different income brackets under its 2026/2027 guidelines.
In a guide released on Monday, October 19, 2026, the tax authority confirmed that residential property owners earning less than KSh 24,000 per month are exempt from the Monthly Rental Income (MRI) tax regime.
Landlords earning below KSh 288,000 annually exempt from MRI
According to KRA, residential landlords whose gross rental income falls below KSh 288,000 annually are not required to pay MRI tax.
The authority, however, clarified that this exemption only applies to the MRI regime. Landlords earning below the threshold may still be required to declare their income under the annual income tax system, depending on their individual circumstances.
Tax rates for landlords earning above the threshold
Residential property owners earning between KSh 288,000 and KSh 15 million annually are subject to MRI tax at a rate of 7.5% of their gross rental income.
The rate took effect on January 1, 2024, and is calculated on the total rent received. KRA noted that landlords cannot deduct expenses, losses or capital expenditure from their gross rental income when calculating the tax.
Landlords earning more than KSh 15 million annually fall outside the MRI system and must declare their rental earnings under the annual income tax regime.
The MRI framework also excludes commercial properties, including shops, offices and industrial premises, regardless of the rental income generated.
Non-resident landlords are subject to a separate tax arrangement introduced under the Finance Act 2026. They are required to pay a final tax of 30% on gross rental income earned from immovable property in Kenya. Returns must be filed and payments made by the 20th day of the month following the month in which the income was received.
Filing deadlines and penalties
Landlords covered by the MRI regime must file their returns and pay the tax by the 20th day of the month following the month they receive rent.
For example, rental income collected in September must be declared and the corresponding tax paid by October 20.
KRA warned that late filing attracts a penalty of KSh 2,000 or 5% of the tax due, whichever amount is higher.
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Late payments attract a 5% penalty, while interest of 1% per month accrues on the outstanding tax until payment is completed.
The guidelines also state that eligible landlords are subject to the Affordable Housing Levy, charged at 1.5% of gross rental income.
To simplify compliance, KRA has introduced the Electronic Rental Income Tax System through eCitizen, enabling landlords within the taxable bracket to register, file returns and make payments electronically.
