Landlords who let residential property in Kenya often pay Monthly Rental Income tax, known as MRI. It is a simple tax, but it comes with a monthly filing rhythm that is easy to forget. This guide explains the steps and what to have ready.

Who it applies to

MRI is charged on gross residential rent received by a resident individual whose annual rent falls between KES 288,000 and KES 15,000,000. The rate is 7.5% of the rent. It does not apply to commercial rent, to rent received by companies or to non-residents, who are taxed on the annual income tax route. Our rental income tax calculator shows which route applies to your portfolio.

What you file and when

The return and the payment are due by the 20th of the month after the month in which you received the rent. Rent received in March is reported and paid by 20 April. No expenses are deducted, because the tax is on gross rent. If you receive rent from many tenants, you add them together for the month.

Step by step

  1. Make sure the obligation is on your iTax account. If you are a landlord and registered only for income tax, add the rental income obligation through your profile.
  2. Total the rent received in the month. Use the bank and mobile money statements as your source. Include rent paid by agents on your behalf, before their commission.
  3. Log in to iTax yourself and open the monthly rental income return.
  4. Enter the gross rent. The system works out the tax at the MRI rate.
  5. Submit the return. It generates a payment registration number, or PRN.
  6. Pay using the PRN through a bank, mobile money or another approved channel.
  7. Save the acknowledgement and the payment receipt.

Agents and withholding

If a managing agent collects rent for you, find out whether it is an appointed agent that withholds tax. Where tax is withheld and paid to KRA for you, it counts towards your MRI, so avoid paying twice. Ask for a statement each month that shows the rent collected, the tax paid and the commission. Our rent withholding calculator shows the figure for a given rent.

Nil months

If a property was empty or you received no rent in a month, file a nil return for that month, as long as the obligation is on your account. Missing a month creates a penalty, which our penalty calculator can estimate. On a monthly MRI of KES 7,500 filed 30 days late, for instance, the combined penalty and interest on our settings is –.

What to keep

  • Tenancy agreements and the rent roll.
  • Bank and mobile money statements.
  • Agent statements and withholding certificates.
  • Every acknowledgement and payment receipt.

If your rent grows

Your total residential rent for the year decides whether MRI applies. If it rises above the upper limit, you move to the annual route, where expenses can be deducted but you file an annual return and may pay instalment tax. Review your position at the start of each year.

This guide is general information and not tax advice. Ask a tax agent if your portfolio is large or mixed.