If you own residential property in Kenya and earn rental income from tenants, you are required to pay a simplified tax specifically designed for landlords. Introduced to make compliance straightforward, this tax applies to both individuals and corporate companies.
What Exactly is Residential Rental Income Tax? Instead of forcing you to compute complex net profit margins or track every tiny maintenance receipt, the KRA uses a simplified gross tax regime. It is calculated directly on your gross rental income—the total rent you collect before deducting any expenses.
The Current Rules: Landlords pay a flat percentage rate on the total gross rent received each month. You must file your return and remit the payment by the 20th of the following month. For example, rent collected in January must be declared and paid by February 20th.
What If Your Expenses Are High? Because this is a simplified flat tax on gross income, you do not get to deduct expenses. However, if your rental property has massive overheads or you are operating at a loss, you can choose to opt out of this regime by writing to the KRA to be taxed under standard corporate or individual dynamic tax rates instead.
