A Landlord's Guide to MRI & Rental Income Tax in Kenya (2026)

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 (10–30%)	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 5,000 or 5% of tax due (whichever is higher)
Annual Return (IT1)	30 June each year	KES 20,000 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:

1. Your total rental income exceeds KES 15 million per year — MRI is no longer available
2. You have significant deductible expenses — mortgage interest, maintenance, insurance, and management fees can reduce your taxable income substantially
3. 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

PropTraka automates the compliance burden so you never miss a deadline:

• MRI Tax Reports — automatically calculates your 7.5% MRI tax each month based on actual rent collected
• KRA eTIMS Integration — submit invoices directly to KRA's electronic tax system
• Expense Tracking — categorises expenses for annual regime deductions
• TCC Validation — verify your Tax Compliance Certificate status in real time
• Automated Reminders — receive alerts before filing deadlines

Common Mistakes Kenyan Landlords Make

1. Not filing nil returns — even months with zero income require a return
2. Using the wrong regime — if your expenses exceed 25% of rent, the annual regime may save you money
3. Missing the MRI deadline — the 20th of each month is strict; penalties compound
4. Not keeping records — KRA can audit up to 5 years back. Digital records via PropTraka protect you
5. Ignoring eTIMS requirements — all VAT-registered landlords must issue electronic invoices

Action Steps for Landlords

1. Verify your KRA PIN is active — use PropTraka's PIN Checker to confirm your status
2. Choose the right tax regime — compare MRI (7.5% flat) vs annual (with deductions) for your situation
3. Set up automated MRI reports — let PropTraka calculate your monthly obligation
4. File on time, every time — set calendar reminders or use PropTraka's automated alerts
5. Keep digital records — scan and upload all receipts and invoices to your PropTraka account