- The Kenya Revenue Authority released its 2026/2027 rental income tax guidelines on Monday, October 19, 2026, setting out who qualifies for exemption
- KRA confirmed that landlords earning below KSh 288,000 annually are exempt from the Monthly Rental Income tax regime
- The guidelines also outline separate rules for commercial property owners, high earners, and non-resident landlords
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The Kenya Revenue Authority has issued a formal clarification on how rental income tax applies to landlords across different earning brackets.
Source: UGC
KRA confirmed that those earning below KSh 24,000 a month from residential properties fall outside the Monthly Rental Income (MRI) tax regime.
The clarification was contained in a guide released on Monday, October 19, 2026, as part of the Authority's 2026/2027 rental income tax guidelines.
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Who qualifies for the MRI exemption
Residential landlords whose gross annual rental receipts fall below KSh 288,000 are not liable for MRI tax.
"Landlords who earn rental income which is less than KSh 288,000 per year are exempt from Monthly Rental Income (MRI) Tax," KRA stated in the guide.
KRA was careful to note, however, that the exemption is limited to the MRI regime.
Landlords beneath the threshold may still carry obligations under annual income tax rules, depending on their individual circumstances.
What landlords within the taxable band must pay
Residential landlords earning between KSh 288,000 and KSh 15 million a year are required to pay MRI tax at 7.5% of their gross rental income each month. This rate took effect on January 1, 2024.
KRA reiterated that the tax is charged on total rent received, with no allowance for expenses, losses or capital deductions.
"No expenses, losses or capital deductions are allowed for deduction from the gross rent," the Authority stated.
Landlords whose annual rental income exceeds KSh 15 million fall outside the MRI framework entirely and must declare their rental earnings under the annual income tax regime.
The same applies to income from commercial properties such as shops, offices and industrial spaces, which are excluded from MRI regardless of the amount earned.
Non-resident landlords are subject to a separate framework introduced under the Finance Act 2026, under which they pay a final tax of 30% on gross rent from immovable property in Kenya, with returns and payments due by the 20th day of the following month.
Filing deadlines and penalties
For landlords within the MRI band, returns and payments must be submitted by the 20th day of the month following the month in which rent was received.
Rental income collected in September, for instance, must be declared and paid by October 20.
Late filing attracts a penalty of KSh 2,000 or 5% of the tax due, whichever is higher. Late payment draws a 5% penalty, with additional interest accruing at 1% per month on the outstanding balance until it is cleared.
KRA's guidelines also note that the Affordable Housing Levy of 1.5% of gross rental income applies to eligible landlords, adding a further compliance requirement.
The Authority has additionally rolled out the Electronic Rental Income Tax System through eCitizen to simplify registration, filing and payment for landlords in the taxable bracket.
Source: TUKO.co.ke