A Landlord's Guide to MRI & Rental Income Tax in Kenya (2026)
Everything Kenyan landlords need to know about Monthly Rental Income (MRI) tax, filing deadlines, deductible expenses, and how to stay compliant with KRA requirements.
What Is Rental Income Tax in Kenya?
If you earn rental income from property in Kenya, the Kenya Revenue Authority (KRA) requires you to pay Rental Income Tax. This applies whether you own one rental unit or a hundred — there is no exemption threshold for landlords.
Kenya offers two tax regimes for rental income earners:
| Regime | Who Qualifies | Tax Rate | Filing |
|---|---|---|---|
| Monthly Rental Income (MRI) | Landlords earning ≤ KES 15M/year from rent | 7.5% of gross rent | Monthly by 20th |
| Annual Income Tax | Landlords earning > KES 15M/year or with other income | Progressive rates from 10% up to 35% | Annual return |
Most small and mid-sized Kenyan landlords fall under the MRI regime, which is simpler and more affordable.
Monthly Rental Income (MRI) Tax Explained
Under the MRI tax regime, you pay a flat 7.5% of your gross monthly rental income to KRA. This is a simplified tax — you do not deduct expenses.
How to Calculate MRI Tax
Formula: Gross Monthly Rent × 7.5% = MRI Tax Due
Example:
- You collect KES 200,000/month across 3 units
- MRI Tax = KES 200,000 × 7.5% = KES 15,000/month
Key MRI Filing Deadlines
| Obligation | Deadline | Penalty for Late Filing |
|---|---|---|
| Monthly MRI Return | 20th of following month | KES 2,000 or 5% of tax due (whichever is higher) |
| Annual Return (IT1) | 30 June each year | KES 2,000 minimum |
| PIN Registration | Before first rental | N/A — but you cannot file without it |
Important: Even if you have zero rental income in a month (e.g., vacant units), you must still file a nil return to avoid penalties.
When to Switch to the Annual Tax Regime
You should consider the Annual Income Tax regime if:
- Your total rental income exceeds KES 15 million per year — MRI is no longer available
- You have significant deductible expenses — mortgage interest, maintenance, insurance, and management fees can reduce your taxable income substantially
- You earn other non-rental income — employment, business, or investment income must be consolidated
Deductible Expenses Under Annual Regime
| Expense | Deductible? | Notes |
|---|---|---|
| Mortgage interest | ✅ Yes | Only interest, not principal |
| Property insurance | ✅ Yes | Building insurance premiums |
| Maintenance & repairs | ✅ Yes | Routine maintenance only, not improvements |
| Property management fees | ✅ Yes | Agent or manager commissions |
| Legal fees (tenancy) | ✅ Yes | Lease drafting, eviction costs |
| Land rates & rent | ✅ Yes | County government charges |
| Capital improvements | ❌ No | Renovations that add value |
| Personal expenses | ❌ No | Not related to property |
How PropTraka Helps You Stay Compliant
Once you have logged your properties and rent payments, PropTraka takes the manual maths and record-keeping out of staying compliant:
- MRI Tax Reports — calculates your 7.5% MRI tax each month based on the rent you have recorded as collected, so the figure for your return is ready when you need it
- Expense Tracking — categorises your expenses by type, so the deductions you can claim under the annual regime are organised in one place
- Free Rental Tax Calculator — a no-signup tool to estimate your MRI tax before you file, so you know the figure to expect
- Filing Reminders — set reminders so the 20th doesn't catch you off guard, alongside your rent and lease reminders
- Digital Records — keeps your receipts and invoices in one place, ready to hand over if KRA ever asks
eTIMS invoicing in PropTraka is coming soon. Once it goes live and your KRA OSCU credentials are connected, you'll be able to issue compliant electronic rent invoices straight from PropTraka — for now, the records above keep your filing organised.
Common Mistakes Kenyan Landlords Make
- Not filing nil returns — even months with zero income require a return
- Using the wrong regime — if your expenses exceed 25% of rent, the annual regime may save you money
- Missing the MRI deadline — the 20th of each month is strict; penalties compound
- Not keeping records — KRA can audit up to 5 years back. Digital records via PropTraka help you stay ready
- Ignoring eTIMS requirements — VAT-registered landlords must issue electronic invoices
Action Steps for Landlords
- Verify your KRA PIN is active — log in to the KRA iTax portal and confirm your PIN status before you file
- Choose the right tax regime — compare MRI (7.5% flat) vs annual (with deductions) with PropTraka's free Rental Tax Calculator
- Set up your MRI reports — record your rent in PropTraka and let it calculate your monthly obligation for you
- File on time, every time — set calendar reminders, or use PropTraka's reminders so the 20th never slips
- Keep digital records — scan and upload all receipts and invoices to your PropTraka account
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