The Kenya Revenue Authority (KRA) has clarified that landlords collecting less than KSh24,000 per month from residential properties are exempt from Monthly Rental Income (MRI) tax under its 2026/2027 rental income guidelines.
In guidance released on October 19, 2026, the tax authority stated that residential landlords earning less than KSh288,000 annually do not fall under the monthly rental income tax regime.
The clarification offers relief to small-scale property owners whose rental earnings fall below the set threshold. However, the exemption applies specifically to MRI tax and does not automatically exempt landlords from every other applicable income tax obligation.
Which Landlords Must Pay Rental Tax?
Under the guidelines, the MRI regime applies to qualifying resident landlords earning more than KSh288,000 but not exceeding KSh15 million annually from residential rental properties.
Landlords within this category are required to pay tax at a rate of 7.5 per cent of their gross rental income.
The tax is calculated on the total rent received before expenses are deducted. This means landlords cannot subtract property maintenance costs, losses or other capital deductions when calculating their MRI tax liability.
For example, a landlord receiving KSh50,000 in monthly rent would generally pay KSh3,750 in MRI tax, provided the income qualifies under the regime.
Landlords earning more than KSh15 million annually fall outside the simplified monthly system and must account for their rental income under the applicable annual income tax rules.
Commercial Property Owners Face Different Rules
KRA has also clarified that rental income from commercial properties, including shops and offices, is excluded from the standard MRI regime.
However, this does not mean commercial rental income is automatically tax-free. Such earnings must be handled under the applicable income tax framework.
Non-resident landlords are also subject to separate tax arrangements for income earned from properties in Kenya.
Property owners should therefore establish which tax rules apply to their specific circumstances rather than assuming that exclusion from MRI means exemption from all taxes.
KRA Sets Deadline for Rental Tax Payments
Landlords who are liable for MRI tax must file their returns and pay the amount due by the 20th day of the month following the month in which rent was received.
For instance, tax due on qualifying rental income received in September must be filed and paid by October 20.
KRA warns that late filing and late payment can attract penalties and interest under the applicable rules.
The authority’s latest guidance is intended to clarify the income thresholds and obligations affecting residential property owners as Kenya continues to strengthen rental income tax compliance.
Landlords earning below KSh24,000 monthly should still confirm their wider tax obligations with KRA, particularly where they have other sources of income or properties operating under different tax arrangements.