KRA’s eyes Landlord Tax: How is Rental Income Tracked and Taxed in Kenya?

The Kenya Revenue Authority is expanding its efforts to capture rental income that may not be reaching the tax system.

On October 28, 2026, KRA told the National Assembly's Departmental Committee on Finance and National Planning that it had identified more than one million property owners through a digital system designed to compare property records with rental-income declarations.

The authority is using its Electronic Rental Income Tax System (eRITS), launched in April 2025, to improve the registration of rental properties, simplify tax filing and identify possible gaps in compliance.

The platform connects with government digital services, including eCitizen, and allows landlords to register property details, update ownership information and declare rental income.

KRA is also developing geolocation mapping capabilities to improve its understanding of rental properties across the country.

The one-million figure represents property owners identified for scrutiny, not a finding that every person on the list has evaded tax.

The authority will still need to establish individual tax obligations and any under-declaration.

How much tax does a landlord pay?

Kenya operates a simplified Residential Rental Income Tax regime, commonly known as Monthly Rental Income (MRI).

Under the current rules, resident individuals and companies earning gross residential rental income of more than Sh288,000 but not exceeding Sh15 million annually generally qualify for the regime.

The tax rate is 7.5% of gross rent received, effective January 1, 2024.

For example, a landlord collecting Sh50,000 monthly pays Sh3,750 in rental income tax under the MRI regime.

The calculation is based on gross rent rather than profit.

This means landlords cannot deduct expenses such as repairs, property management fees, insurance, security, loan interest or maintenance costs when calculating MRI.

The tax is final for qualifying residential rental income, meaning it does not have to be declared again in the annual income tax return.

Landlords earning less than the Sh288,000 annual threshold generally account for rental income under the ordinary income-tax framework.

Those earning above Sh15 million also fall outside the simplified MRI regime and must declare the income under the applicable annual tax arrangements.

Commercial rental income is also generally handled under the ordinary income-tax system rather than the residential MRI regime.

How KRA calculates and collects it

The eRITS system is designed to reduce the need for landlords to navigate separate property registration and tax-filing processes.

Property owners can access the system through KRA's eRITS portal or the relevant eCitizen services.

The registration process allows landlords to add new properties, update existing records or deregister properties.

KRA's instructions also require relevant tenant details, including the tenant's PIN, and estimated monthly rental income.

For qualifying landlords, rental income tax returns are filed monthly through iTax.

The deadline is the 20th day of the month following receipt of rent.

A landlord who receives rent in October, for example, should file and pay the applicable tax by November 20.

KRA also requires a NIL return where no rent is received during a particular month.

The authority has also introduced provisions allowing appointed rental income tax agents to collect and remit the tax on behalf of landlords.

What happens if a landlord fails to comply?

KRA's published guidelines provide penalties for late filing and late payment.

For individuals, late filing attracts a penalty of Sh2,000 or 5% of the tax due, whichever is higher.

For companies, the penalty is Sh20,000 or 5% of the tax due, whichever is higher.

Late payment attracts a 5% penalty, with interest of 1% per month or part of a month on unpaid tax.

Landlords should also ensure that their registered property details match the actual rental arrangements.

Incorrect ownership details, missing tenant information and differences between rental receipts and declared income can attract additional scrutiny.

Why KRA wants more rental tax

The rental property market represents a significant revenue opportunity for the government.

When eRITS was launched in April 2025, Treasury Principal Secretary Chris Kiptoo said the government was collecting approximately Sh17 billion annually in rental income tax against estimated potential collections of at least Sh100 billion.

That estimate suggested significant room to improve compliance, although the difference does not automatically represent confirmed tax evasion.