The Kenya Revenue Authority (KRA) now says that landlords earning less than Ksh288,000 annually from residential rentals are exempt from monthly rental income tax.
In its 2026/2027 rental income tax guide, released on Monday, October 19, KRA explained which landlords are exempt from monthly rental income tax and which must pay tax based on annual earnings.
"Landlords who earn rental income which is less than Ksh288,000 per year are exempt from Monthly Rental Income (MRI) Tax," KRA explained, meaning those who earn less than Ksh24,000 per month are exempt.
The taxman also listed landlords earning more than Ksh15 million annually from rental properties among those excluded from the monthly rental income tax regime.
A collage of rental apartments in Nairobi
Photo
Villa Care Kenya/EazzyRent
KRA also clarified that the monthly rental income tax does not apply to landlords who earn income from commercial properties, such as shops and offices, under the current tax system.
Meanwhile, Kenyan landlords who do not fall under any of the aforementioned categories are required to pay 7.5 per cent of their gross rental income monthly, a rate that took effect on January 1, 2024.
In its guide, the Authority explained that landlords cannot deduct expenses, losses or other major deductions when calculating the tax payable under the monthly rental income.
“No expenses, losses or capital deductions are allowed for deduction from the gross rent,” the taxman clarified, insisting that the landlords must remit the amount from the gross earnings.
In addition to the rental income tax, KRA stated that the Affordable Housing Levy, charged at 1.5 per cent of gross rental income, also applies to every eligible landlord.
However, non-residents earning rental income from property in Kenya are subject to a separate tax system introduced on July 1, 2026, which requires them to pay 30 per cent of the total rent collected.
KRA stated that the 30 per cent tax applies to both residential and commercial properties owned by non-residents, including houses, shops and offices.
Landlords subject to rental tax must file their returns and pay the tax on or before the 20th day of the following month, meaning that rental income earned, for instance, in September must be declared and paid by October 20.
KRA warned that late filing attracts a penalty of Ksh2,000 or 5 per cent of the tax due, whichever is higher, for individuals, while late payment attracts a 5 per cent penalty.
Kenya Revenue Authority (KRA) Commissioner General Adan Mohamed, during a meeting at the Treasury Buildings in Nairobi on June 9, 2026.
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Treasury