KRA Clarifies Rental Tax Rules for Landlords Earning Below KSh 24,000 a Month

The Kenya Revenue Authority (KRA) has clarified the rental income tax rules for landlords, explaining which property owners qualify for exemption and the rates applicable to those required to pay tax.

In its 2026/2027 rental income tax guidelines released on Monday, October 19, KRA stated that residential landlords earning less than KSh 24,000 monthly, equivalent to KSh 288,000 annually, are exempt from Monthly Rental Income (MRI) tax.

However, the exemption applies specifically to the MRI regime and does not automatically remove every possible income tax obligation a landlord may have.

The clarification provides guidance for property owners seeking to understand their tax responsibilities, particularly those collecting rent from residential houses.

Under the guidelines, residential landlords earning between KSh 288,000 and KSh 15 million annually fall within the MRI tax bracket. They are required to pay tax at a rate of 7.5% of their gross rental income, a rate that took effect on January 1, 2024.

The tax is calculated on the total rent received without deducting property maintenance costs, losses or other expenses.

This means landlords cannot subtract the money spent on repairs and other property-related costs before calculating their MRI tax liability.

For example, a landlord collecting KSh 40,000 monthly in residential rent would pay KSh 3,000 in MRI tax at the 7.5% rate, before considering any other applicable obligations.

KRA also clarified that landlords earning more than KSh 15 million annually do not fall under the MRI regime. Instead, they must declare their rental earnings under the annual income tax system.

Commercial property owners are also treated differently. Rental income from shops, offices and industrial premises is excluded from the MRI framework, regardless of the amount collected.

Non-resident landlords face a separate tax arrangement under the Finance Act 2026 guidelines outlined in the report. They are required to pay a final tax of 30% on gross rental income from immovable property in Kenya, with returns and payments due by the 20th day of the following month.

KRA has also reminded landlords within the MRI tax bracket to observe the monthly filing and payment deadlines.

Rental income received in September, for instance, should be declared and the applicable tax paid by October 20.

Landlords who miss the filing deadline risk a penalty of KSh 2,000 or 5% of the tax due, whichever amount is higher. Late payment attracts a 5% penalty, while additional interest of 1% per month accrues on the outstanding amount until it is settled.

The guidelines further highlight the Affordable Housing Levy, which the report says applies at 1.5% of gross rental income for eligible landlords. Property owners should establish whether the levy applies to their circumstances.

To simplify compliance, KRA has introduced the Electronic Rental Income Tax System through eCitizen, allowing landlords in the taxable category to register, file returns and make payments electronically.

The Authority’s clarification is intended to help property owners distinguish between the different tax arrangements and understand the obligations that apply to their rental earnings.

Landlords should consult KRA’s official guidance to confirm their tax treatment, particularly where they earn income from multiple properties or both residential and commercial premises.