Never Declared Your Rent? How to Put It Right With KRA

If you never declared your rent, start now: register the property on iTax, work out the rent and tax for each missing period, file true returns, then pay or apply for a payment plan. You will still owe the tax and may owe penalties and interest. For periods up to 31 December 2025, the amnesty can remove those charges only if you apply and pay all the principal tax by 31 December 2026. After that date, this relief is closed.

Why waiting makes it harder

KRA does not need your return to act. Under the Tax Procedures Act:

• It can estimate your tax. A default assessment is KRA’s own best estimate, and penalties and interest run from the original due date: section 29.
• It has more data. Section 29A lets KRA assess you from information it holds.
• It can ask your tenants. Section 59 of the Income Tax Act lets KRA require an occupier to give the owner’s name and the rent payable.
• Old years may stay open. Default assessments normally stop five years after the end of the period, but not for gross or wilful neglect, evasion or fraud: section 29(5) and (6).

Not filing without reasonable cause is also an offence: section 94.

Do not try to hide it

Keeping rent in cash or in another person’s name does not make it tax free, and doing that on purpose can be evasion. Nor is a nil return the answer for a month when you collected rent.

• A deliberate false statement carries a penalty of 75 percent of the tax shortfall: section 84.
• Knowingly leaving income out of a return is an offence: section 97.
• Telling KRA about a false statement before it finds out or starts an audit reduces the shortfall penalty by ten percentage points: section 84(4).

If you have already filed returns that left out rent, you can apply to amend them within five years of filing: section 31(2) and (4).

How to put it right

1. List your properties and tenants. For each unit, note when the rent started, how much you received each month, and any months it stood empty.
2. Rebuild the figures. Use tenancy agreements, bank and M-Pesa statements and receipts. Include premiums and similar payments for occupying the property.
3. Work out which rules apply to each year. See below.
4. Register the property on iTax. Add the rental income obligation if it is missing.
5. File every missing return. Our guide on catching up on returns sets out the process. If iTax does not accept very old periods, ask your Tax Service Office.
6. Pay, or apply for a plan. Our tax amnesty guide explains how to pay only the principal tax on periods it covers.
7. Stay current. The monthly landlord steps apply from here on.

If KRA has already written to you, deal with that first. See what to do about a demand letter.

Which rules apply to which year

• House rent inside the regime: KRA’s rental income page gives 7.5 percent of gross rent from 1 January 2024. Periods from 2016 to the end of 2023 used 10 percent. The Finance Act 2026 did not change the rate.
• The band: section 6A now covers yearly rent above KES 288,000 and up to KES 15 million. KRA dates these limits from 1 January 2021, so check older years.
• Rent outside the regime: commercial rent, and house rent above or below the band, belongs in your annual return.
• Expenses: these cannot be deducted inside the regime. Opting out takes effect only from the following year under the regulations, so it does not change past years.

What it can cost

Charges for each late monthly return:

• 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).
• Interest: 1 percent a month (section 38).

Example. An individual received KES 50,000 a month in house rent for all of 2025 and declared none of it. That is KES 600,000 for the year, which is inside the band.

Item	Per month (KES)	For 12 months (KES)
Tax at 7.5 percent	3,750	45,000
Late filing penalty	2,000	24,000
Late payment penalty at 5 percent	187.50	2,250

Interest comes on top.

The amnesty and what comes after it

Section 37E of the Tax Procedures Act, as amended by the Finance Act 2026, covers interest, penalties and fines that built up to 31 December 2025. You must apply and pay all outstanding principal tax not later than 31 December 2026. Other conditions apply, including that you incur no further tax debt.

It does not cancel the tax itself. It does not cover rent from 1 January 2026, so tax, penalties and interest on those months stay payable.

Once 31 December 2026 has passed, do not count on another route. The Voluntary Tax Disclosure Programme in section 37D was set for three years from 1 January 2021, so that period is over. Waivers now depend on limited grounds such as system errors or incorrect registration: section 89.

Our tax team can work through the figures with you, and our accounting team can rebuild your rent records.