Rental Income Tax in Kenya: What Landlords Must File

If you are a resident landlord and your house rent for the year is above KES 288,000 and not more than KES 15 million, you pay residential rental income tax of 7.5 percent of gross rent. You file a return and pay through iTax by the 20th of the month after you receive the rent. You cannot deduct expenses, and the tax is final on that income.

The rate is 7.5 percent, not 10 percent

You may have read that the rate rose to 10 percent in 2026. That was a proposal in the Finance Bill 2026. It did not become law. Section 21 of the Finance Act 2026 changes other rates in the Third Schedule, and leaves the rental rate alone.

The rate is in paragraph 10, Head B of the Third Schedule to the Income Tax Act. It has been 7.5 percent since 1 January 2024. It was 10 percent before that, so older guides and one part of KRA’s rental income page still show the old figure.

Who is in the regime

Section 6A of the Income Tax Act sets the test. You are in if all of these are true:

• You are a resident person, whether an individual or a company.
• The rent is for the use or occupation of residential property in Kenya.
• Your rent for the year is above KES 288,000 and does not exceed KES 15 million.

KRA’s website shows the lower limit as KES 280,000. The Act says KES 288,000, and the Act is what counts.

Partnerships that own rental property are covered too, under the 2016 regulations.

If your rent falls outside the regime

• Commercial property: the regime does not apply. Rent from shops, offices and similar premises goes in your annual income tax return, with allowable expenses.
• House rent above KES 15 million a year: this also goes in your annual return. If your rent passes the limit during the year, or you expect it to, you must tell KRA before the year ends. Failing to do so is an offence under the regulations.
• House rent of KES 288,000 or less a year: section 6A does not cover it, but rent is still income under section 6 of the Act. Declare it in your annual return.
• Non-resident owners: the Finance Act 2026 added section 6B, a separate final tax on rent earned by non-residents. Your dates and rates are different, so do not use this monthly regime.

What you must do each month

1. Register the property on iTax. Use the registration menu and choose Register Property Details. You enter the tenant’s PIN and the expected monthly rent.
2. File the return. In iTax, go to Returns, File Return, then Income Tax - Rental Income, and enter the rent you received.
3. Pay. Go to Payments, Payment Registration, choose Income Tax with the rent sub-head, and use the payment number it gives you.
4. Keep your records. Keep tenancy agreements, rent receipts and bank or M-Pesa statements for five years: Tax Procedures Act, section 23.

Tax is on rent you receive, so include any premium or similar payment for occupying the property. KRA expects a nil return for any month with no rent.

Example. A landlord collects KES 80,000 a month from two flats. That is KES 960,000 a year, which is inside the band. The tax is KES 6,000 a month (7.5 percent of 80,000), or KES 72,000 for the year. Repairs and loan interest do not change the figure.

If an agent collects your rent

KRA can appoint a person who collects rent for an owner to deduct the tax: section 35(3AA) of the Income Tax Act. Only someone appointed in writing may do this. The agent pays KRA within five working days and gives you a certificate.

You still have to file your monthly return. KRA says iTax applies the withheld tax as a credit, so check that your credits show up.

Late filing and late payment

Under the Tax Procedures Act, these charges apply:

• Late return, individual: 5 percent of the tax, or KES 2,000 if that is higher (section 83).
• Late return, company: 5 percent of the tax, or KES 20,000 if that is higher (section 83).
• Late payment: 5 percent of the tax (section 83A), plus interest of 1 percent a month (section 38).

These are per return, so a few missed months add up quickly. See our filing deadlines calendar. If you have fallen behind, start with our guide to catching up on returns.

Leaving the regime

Section 6A lets you opt out by written notice to KRA. You then pay tax on your rental profit through the annual return, and can claim allowable expenses.

The current regulations ask for the notice at least three months before your year ends, and the change starts the following year. KRA has published draft regulations that keep the same timing. Check whether they have been finalised before you act.

Before you decide, compare both positions from your real rent and costs. The annual route needs proper books and may bring instalment tax, so the right answer depends on your figures. Our accounting team can set out the numbers.