Rental Income Tax in Kenya: The 7.5% MRI Rule (2026)

If you rent out a house, a flat, a bedsitter or a block of units in Kenya, you are almost certainly inside a tax regime with its own rate, its own deadline and its own return — and one that behaves very differently from the income tax you may be used to.

It is called Monthly Rental Income tax, usually shortened to MRI, and the most important thing to understand about it is that it is charged on rent received, not on profit. That single fact catches out more landlords than anything else.

The rate and the band

Per the KRA, residential rental income tax is charged at 7.5% of gross rent received, a rate effective from 1 January 2024, and it is a final tax.

You are inside the MRI regime if your annual residential rental income is:

more than KSh 288,000 a year (KSh 24,000 a month), and
not more than KSh 15,000,000 a year.

Below the lower figure you are outside MRI. Above the upper figure you leave the simplified regime and declare your rental income alongside your other income in your annual return, under ordinary income tax rules.

A warning about the rate you will find elsewhere. The KRA's own MRI FAQ page still says 10%, and a great deal of Kenyan rental-tax content repeats it. That was the rate before 2024. It was reduced to 7.5% with effect from 1 January 2024. When two pages on the same site disagree, the one carrying an explicit effective date is the one to trust — and confirm before you file.

"Gross rent" means gross

This is where the money is won and lost.

MRI is charged on the rent that reaches you, with no deduction for expenses, losses or capital allowances. The KRA is explicit about this. That means none of the following reduce your bill:

Mortgage interest on the property
Land rates and land rent
Service charge
Repairs, painting, plumbing, a new geyser
Agent or caretaker fees
Insurance on the building
Void periods elsewhere in your portfolio

If a tenant pays you KSh 40,000 and you hand KSh 4,000 straight to an agent, your tax base is still KSh 40,000.

And "final tax" means what it says: once MRI is paid, that income is finished with. You do not add it into your annual income tax return and pay again, and equally you cannot use rental losses to shelter other income.

Filing: monthly, by the 20th

The return is due on or before the 20th day of the month following the month the rent relates to. Rent received in January is declared and paid by 20 February.

That is twelve returns a year. In practice each one is a short exercise — total the rent received, multiply by 7.5%, file on iTax, pay — provided you have kept a rent record. The work is in the record-keeping, not the filing.

File even in a month with nothing. A month with no rent received is still a month with a return due. A nil return takes two minutes; a gap in your filing history takes far longer to explain.

If you have never filed on iTax before, the mechanics of the portal are covered in how to file your KRA tax returns on iTax.

A worked example

Suppose you own four units letting at KSh 25,000 each.

Monthly gross rent, fully let: 4 × 25,000 = KSh 100,000
Annual gross rent: KSh 1,200,000 — inside the 288,000–15m band, so MRI applies
Monthly MRI: 100,000 × 7.5% = KSh 7,500, due by the 20th of the next month
Annual MRI: roughly KSh 90,000

Now suppose one unit sits empty for two months and you spend KSh 60,000 on a roof repair. Your rent received falls, so your MRI falls with it — the tax follows the rent. But the KSh 60,000 repair does not come off. You pay 7.5% of whatever rent actually came in, and you carry the repair yourself.

That asymmetry is the shape of the regime: it flexes with your income, but never with your costs.

What MRI does not cover

MRI is specifically residential rental income within the band. It is not the whole of property tax in Kenya, and a few situations sit outside it:

Commercial property — letting shops, offices or godowns is not residential rental income and follows different rules.
Rent above KSh 15 million a year — you move to the ordinary regime, declaring rental income with your other income in the annual return. That regime does allow genuine expenses, which is why very large landlords are not simply paying 7.5% of everything.
Non-residents — the simplified resident regime is not the route; take advice.

If your affairs are mixed — a shop plus flats, or a business plus a rented-out house — expect more than one obligation running at once. A trading business, for instance, may sit in Turnover Tax, which is a separate regime with its own band and its own return, and rental income is explicitly excluded from it.

The records that keep you safe

You need very little, but you need it consistently:

A rent roll. One line per unit per month: what was due, what was received, and when. The received column is the one that matters for tax.
The receipts you issue. Tenants ask for them, and they are your evidence.
A separate account for rent. If rent lands in the same M-Pesa line you buy groceries with, you will never reconstruct a clean figure, and you will not be able to defend it if asked. A dedicated account or paybill solves this — see how to manage money on M-Pesa, and compare accounts on our bank accounts comparison.
Your expense records anyway. They do not reduce MRI — but if you ever cross KSh 15 million, or sell, or need to show a bank what the property really earns, you will want them. Keep them even though the taxman will not look at them today.

How to think about the 7.5%

A useful mental adjustment: stop thinking of MRI as a tax on your rental profit and start treating it as a cost of collecting rent. At 7.5%, every KSh 100,000 of rent carries KSh 7,500 of tax, in the same way it might carry an agent's commission.

That matters most when you are deciding what a property is worth buying. A yield calculation built on gross rent overstates what you will keep. Take the 7.5% off the top before you compare a rental against, say, a fixed-return alternative — the honest comparison is against instruments where the return is what it says it is, such as those covered in Treasury bills and bonds in Kenya and the broader options in where to save and invest in Kenya.

It also matters for highly geared landlords. Because mortgage interest is not deductible under MRI, a property bought largely on debt can be genuinely loss-making after finance costs while still generating a monthly tax bill. That is not a loophole to be found; it is a structural feature to plan around before you borrow.

Penalties and staying compliant

Late filing and late payment carry consequences, and interest runs on unpaid tax. Confirm the current penalty figures with the KRA directly — they have been revised more than once, and a stale number here would be exactly the error this guide warns about elsewhere.

The protections are dull and effective: file every month including nil months, keep the rent roll current, and never let a quarter accumulate before you look at it. Landlords who get into trouble with MRI almost never do so by miscalculating 7.5% — they do it by not filing for eight months and then facing the whole thing at once.

Frequently asked questions

What is the rental income tax rate in Kenya? 7.5% of gross rent received, effective 1 January 2024, per the KRA. Sources quoting 10% are describing the pre-2024 rate — including, at the time of writing, one of the KRA's own FAQ pages.

Who has to pay Monthly Rental Income tax? Residents with residential rental income above KSh 288,000 and not exceeding KSh 15,000,000 in a year of income.

Can I deduct my mortgage interest, repairs or agent fees? No. MRI is charged on gross rent, with no deduction for expenses, losses or capital allowances. That is the trade-off for the low rate and simple return.

When is rental income tax due? On or before the 20th day of the month following the month in which the rent was received. Rent received in March is filed and paid by 20 April.

Do I declare rental income in my annual return as well? Not if it is taxed under MRI — it is a final tax, so it is not declared again in the annual return. If your rental income exceeds KSh 15 million a year, you do declare it with your other income under the ordinary regime.

What if the house was empty all month? No rent received means no MRI for that month, but you should still file a nil return. The obligation is to file monthly, not only in months when money came in.

Does this apply to commercial property? No. MRI is a residential rental income regime. Letting commercial premises follows different rules — take advice.

Reviewed 29 August 2026. Rate, thresholds and deadline established from the Kenya Revenue Authority's own residential rental income guidance. Tax rules change with each Finance Act — confirm current figures with the KRA before filing. General information, not tax advice.