KRA Reveals Landlords Who Earn Below KSh24,000 Monthly Are Exempt From Rental Tax

The Kenya Revenue Authority (KRA) has clarified which landlords are exempt from monthly rental income tax, outlining the income thresholds, payment deadlines and penalties that property owners must observe under its 2026/2027 tax guidelines.

In its rental income tax guide released on Monday, October 19, 2026, the tax authority stated that landlords earning less than KSh288,000 annually from residential rental properties are exempt from Monthly Rental Income (MRI) tax.

The threshold translates to rental earnings of less than KSh24,000 per month, offering relief to owners of residential properties whose rental income falls below the specified limit.

The authority also listed landlords earning more than KSh15 million annually from rental properties among those excluded from the monthly rental income tax regime.

However, falling outside the MRI system does not automatically mean that a landlord is exempt from all tax obligations. The applicable tax treatment depends on the category of property, the landlord’s residency status and the relevant tax rules.

KRA further clarified that the monthly rental income tax regime does not cover income from commercial properties, including shops and offices, under the system described in its guide.

For landlords who fall within the applicable MRI category, the tax rate is 7.5 per cent of gross rental income. The rate took effect on January 1, 2024, and is calculated before deducting expenses incurred in managing or maintaining rental properties.

The authority emphasised that landlords cannot subtract repair costs, management fees, losses or capital deductions from their gross rental income when calculating MRI tax.

“No expenses, losses or capital deductions are allowed for deduction from the gross rent,” KRA stated in its guidelines.

This means that landlords subject to MRI must calculate the tax using the total qualifying rent collected rather than the amount remaining after paying property-related expenses.

The guide also addresses the Affordable Housing Levy, which is charged at 1.5 per cent of gross rental income for eligible landlords. Property owners should establish whether the levy applies to their circumstances and account for it separately from their rental income tax obligations.

KRA also outlined a different tax treatment for non-residents earning rental income from properties in Kenya. According to the guide, a separate regime introduced on July 1, 2026, requires affected non-resident property owners to pay tax at 30 per cent of the total rent collected.

The stated rate covers both residential and commercial properties owned by non-residents, including houses, shops and offices.

For landlords required to pay monthly rental income tax, the filing and payment deadline falls on the 20th day of the month following the month in which the rent was earned.

For example, rental income received in September must be declared and the applicable tax paid by October 20. Landlords are therefore expected to keep track of their monthly earnings and meet the deadlines to avoid penalties.

The authority warned that individuals who file their returns late may face a penalty of KSh2,000 or five per cent of the tax due, whichever amount is higher. Late payment also attracts a penalty of five per cent.

The clarification provides an important reference for property owners seeking to determine whether they fall within the monthly rental income tax system and how much they may be required to remit to the taxman.

Landlords should, however, confirm their specific tax obligations with KRA, particularly where their annual rental earnings exceed the MRI threshold, their properties generate commercial income or they are classified as non-residents for tax purposes.

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