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Tax & Compliance

You Just Got a KRA Audit Letter — Now What?

Practical first steps for Kenyan landlords facing a KRA audit on their rental income. What KRA actually asks for, what to send, what NOT to do, and how a year of clean records changes everything. Updated for the 2026 Residential Rental Income (eRITS) Regulations.

6 min read

Important. This guide describes general KRA procedure and PropTraka's practical approach. It is not legal or tax advice. For your specific case, engage a registered tax agent or advocate. KRA publishes its current registered tax-agent list and procedures at kra.go.ke.

The envelope you didn't expect

If you've opened your post — or your iTax inbox — and found a letter from KRA asking questions about your rental income, your first reaction is probably a mix of worry and "where do I even start." That's normal. Most landlords have never been audited, and the few who have describe the first 24 hours as the worst part.

The actual audit is usually less dramatic than the letter feels. KRA's job is to check whether your declared income matches reality. If your records are in order, an audit is paperwork. If they're not, it's still survivable — but more work.

Read the letter carefully

KRA audit letters are specific. They'll typically tell you:

  • Which tax periods they're reviewing
  • What they're asking for — bank statements, rental agreements, eTIMS receipts, property records
  • A deadline to respond

Take note of these three things first. Then breathe.

What's new in 2026: the eRITS platform

KRA published the Draft Income Tax (Residential Rental Income Tax) Regulations, 2026, introducing a dedicated eRITS (electronic Residential Income Tax System) for property-level registration. Under the draft regime:

  • Each residential rental property must be registered individually
  • Supporting documentation includes title references, tenancy agreements and a rent roll
  • Audit triggers will commonly include mismatches between rent declared on eRITS and what tenants report as housing benefit on their employment returns, and properties appearing in county registers but absent from eRITS

If your audit letter references eRITS, the questions are likely about register completeness and reconciling declared rent against third-party data. If it predates eRITS, the focus is more likely the Monthly Rental Income (MRI) regime that has applied to most resident landlords.

A note on the regulatory window: stakeholder submissions on the 2026 draft were open through 25 May 2026; rules may shift as they finalise. Verify the current rules with KRA or your tax agent before you act on specifics.

What you should NOT do

A short list, written because each one happens often:

  • Don't ignore the letter. Silence escalates the audit; it doesn't make it go away.
  • Don't call KRA directly to "explain." Substantive conversations with KRA should go through a registered tax agent or advocate.
  • Don't fabricate or backdate anything. If your records have gaps, present them as they are. Tampering can turn a routine audit into a criminal matter.
  • Don't volunteer information beyond what's asked. Answer the specific question.
  • Don't make a payment before understanding what's actually owed. Once you pay, it's much harder to dispute.

What you should do — in order

1. Engage a registered tax agent or advocate

For anything beyond a tiny audit, get professional help. KRA audits are technical; the cost of representation is usually a fraction of the cost of mishandling the response. KRA's website lists registered tax agents.

2. Gather your records

For the audit period, KRA typically wants:

Document typeWhy they want it
Bank and M-Pesa statementsTo verify income deposits
Lease agreementsTo confirm rental amounts and tenancies
eTIMS receiptsTo confirm declared income against issued invoices
MRI / eRITS returns filedTo compare against actual income
Property recordsTo verify ownership and acquisition
Expense receiptsIf you claimed deductions
Tenant identificationTo verify the lease records are real

A complete, organised pack signals you have nothing to hide.

3. Send what's requested, nothing more

Through your tax agent, send a complete response indexed to the specific questions asked. Include a clear cover letter.

4. Track every interaction

Every letter, every call (note the time, person, and topic), every document sent — log it. If the audit escalates or needs to be appealed, this log is gold.

5. Respond to follow-up questions promptly

KRA will often have follow-ups. Audits drag when responses are slow.

If you've made mistakes in the past — KRA's Voluntary Tax Disclosure Programme

Most landlords have, at some point, been less than fully compliant. The Kenyan rental sector has been informal for a long time, and full compliance is recent. If your records show real gaps:

  • Don't compound them with fresh fabrications
  • Discuss with counsel whether voluntary disclosure makes sense. KRA's Voluntary Tax Disclosure Programme (VTDP) provides an avenue to disclose previously undisclosed taxes without punitive penalties or interest. Voluntary rectification is almost always cheaper than the cost of a KRA-initiated audit. Current details are published at kra.go.ke/helping-tax-payers/faqs/voluntary-tax-disclosure-programme.
  • Use this audit as the reset to be fully compliant going forward

How PropTraka changes the picture

If you've been on PropTraka for the audit period, the document-gathering step takes minutes, not weeks. We generate a single Audit Pack that contains:

  • Every rent payment received in the period, with the M-Pesa or bank reference and eTIMS receipt number
  • All leases active in the period
  • Property records and valuation history
  • Expense records (where you uploaded them)
  • A reconciled summary of declared vs. actual income

You give that pack to your tax agent. They file it. Your audit becomes paperwork.

What KRA is usually actually looking for

Audits are not random. The most common triggers for rental-income audits:

  1. Undeclared rental income — properties visible on the land registry but with low or zero declared rent
  2. Lifestyle audits — visible wealth (cars, schools, travel) inconsistent with declared income
  3. Mismatched returns — your filing does not square with what tenants declared as paid rent or housing benefit
  4. eTIMS / eRITS gaps — registered for eTIMS but issuing few or no receipts; properties absent from eRITS
  5. Random selection — yes, this happens

After the audit closes

Whether you're cleared, owe additional tax, or need to file an objection — note what KRA asked for in this audit. Future audits will likely look similar. Keep your records in the shape they wanted them.

Related reading

References

PropTraka generates an Audit Pack at one click for any tax period. If you receive a KRA letter and you've been with us, contact support and we'll get you through it.