For the past couple of years the Kenya Revenue Authority (KRA) has tried several tactics to increase rental income tax collections from landlords in Kenya. This tax bracket has proven to be one of the most elusive. And for a long time, many landlords have gotten away with filing nil returns.
But now, it seems the tax collector unlocked a method that works. For several years now, many landlords have received unexpected emails and messages prompting them to declare their rental income within 30 days, failure to which the government tax collector will initiate measure to recover the owed rental income tax amounts.
Expanding Tax Base
But how is KRA able to track non-compliant residential property owners? In October 2022, the Kenya Revenue Authority announced a data collection exercise on rental properties in Nairobi and its metropolis. The exercise involved KRA agents moving from estate to estate asking question about rental properties. And while this seemed like a brilliant idea to finally get more landlords to remit rental income tax, it proved to be an exercise in futility.
In 2023, the government dangled an incentive to landlords by lowering the rental income tax from 10% to 7.5%. Perhaps this was meant to encourage compliance among landlords in Kenya.
However, the silver bullet that resolved KRA’s headache – and has continued to work like magic was discovered in 2020. The Kenya Revenue Authority partnered with the Kenya Power and Lighting Company (KPLC) to access utility records. Meter data was extremely crucial in mapping out potential landlords. According to an article by the Business Daily individuals with multiple meters registered under their name were singled out as potential landlords.
2015
Monthly Rental Income Tax was introduced in Kenya in 2025 through the Finance Act 2015. The tax took effect in January 2016.
Additional data such as the meter numbers and utility consumption were further used to pinpoint the properties’ locations and estimated property size. A compilation of this data would be used to estimate tax.
Since then, landlords have been receiving emails requesting them to declare their rental income tax. Ultimately, it seems KRA will catch up with most, if not all landlords as utilities’ data becomes clearer and more crisp.
The Finance Act 2023, also paved way for the appointment of Rental Income Tax agents responsible for collection and compliance.
In 2025, the People Daily reported that KRA had ditched its plan to expand the tax base by going after small businesses using M-Pesa Paybill and was instead focusing on rental income tax and Turnover Tax.
What is Montly Rental Income (MRI) Tax in Kenya
Also known as Residential Rental Income Tax was introduced in 2015 through the Finance Act, 2015 and came into effect in January 2016. Monthly Rental Income Tax is paid to KRA by individuals or companies earning rental income from residential properties in Kenya.
Who Pays Rental Income Tax in Kenya
The Finance Act 2020 introduced caps to the rental income tax. Starting 2021 January, only property owners earning rental income which is in excess of Kshs 280,000 but does not exceed Kshs 15 million are required to pay rental income tax. Although Rental Income Tax was initially set at 10% of the gross earnings, the Finance Act 2023 lowered this rate to 7.5% of the gross rent received.
MRI tax is a final tax and KRA does not allow deductions such as expenses or losses as is the case with corporate tax and other brackets.
Non-resident landlords, commercial property landlords and landlords earning more than Kshs 15 million in rental income annually do not pay rental income tax. These categories of property owners belong to other tax brackets.
Penalties and Compliance
Failure to file MRI returns , late filing and late payment of returns and interests can attract penalties. Late filing for instance attracts a Kshs 2,000 fine or 5% of the ta due (whichever that is due). This however, only applies to individual property owners. For companies eligible for MRI the fine amount is set at Kshs 20,000 or 5% of the tax due.
Late payment of rental income tax attracts a 5% penalty, and each month you fail to remit the tax you accrue a 1% interest.
From the look of things, KRA will keep netting more tax papers under this income bracket. If you’re a residential property owner earning between Shs 280,000 and Shs 15 million, it is best to comply in advance to avoid penalties and backdated tax claims which can be stressfull to clear.
To learn more about rental income tax in Kenya and how to register and file, you can visit this KRA web page to learn more.
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