If you’re a landlord in Kenya, understanding how to file and pay Residential Rental Income Tax is crucial. The Kenya Revenue Authority (KRA) has made it easier for residential property owners to comply with tax obligations through simplified guidelines and digital platforms.
Here’s everything you need to know about Rental Income Tax in Kenya—including who it applies to, the rates, filing procedures, and penalties for non-compliance.
What is Residential Rental Income Tax?
Residential Rental Income Tax is a tax charged on rental income earned from residential property in Kenya. It applies to resident individuals or companies earning between Kshs 288,000 (Kshs 24,000/month) and Kshs 15 million per annum from residential rent.
Note:
- Income below Kshs 288,000 or above Kshs 15 million is taxed under a different regime.
- Non-residents are not eligible for this tax regime.
- If you prefer to remain in the existing tax regime (normal income tax), you can opt out.
Residential Rental Income Tax Rate in Kenya
- Flat rate of 10% of the gross rent received.
- No deductions are allowed—expenses, losses, or capital deductions are not considered.
When and How to File R/Rental Income Tax
Filing Due Date:
- Must be filed on or before the 20th day of May every year.
Filing Procedure:
- Log in to the KRA iTax portal (https://itax.kra.go.ke).
- Navigate to the “Returns” section and select “File Rental Income Return”.
- Enter the gross monthly rent received.
- The system will auto-calculate the 10% tax payable.
- For months with no rent received, file a NIL return.
- Submit and generate a payment slip to pay via M-Pesa, bank, or KRA M-Service App.
✅ Tip: You can also use the KRA M-service App to file and pay your rental tax directly from your smartphone.
Important: Final Tax Notice
Residential rental income tax is treated as final tax. This means you do not have to declare it again in your annual income tax return.
Penalties for Late Filing or Payment
Failure to file or pay your rental income tax on time comes with penalties:
1. Penalty for Late Filing:
- Individuals: Kshs 2,000 or 5% of tax due (whichever is higher).
- Corporates: Kshs 20,000 or 5% of tax due (whichever is higher).
2. Penalty for Late Payment:
- 5% of the tax due, plus
- 1% monthly interest on the unpaid amount until fully paid.
Conclusion
Staying compliant with R/Rental Income Tax requirements in Kenya is straightforward if you follow the right procedures. Make sure to file your returns monthly, declare the gross rent, and pay your taxes on time to avoid penalties. The digital tools provided by KRA, including the iTax portal and M-Service App, make it easier than ever to remain compliant.
If you’re a landlord, take advantage of these systems and ensure your tax affairs are in order.
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