Hosting guests through Airbnb, Booking.com or your own website is a business as far as tax is concerned. The income is taxable, you can often claim costs, and the right route can save a lot. The rules differ from long-term rent, so do not assume the monthly rental income tax applies.

Why short stays are treated differently

Monthly rental income tax is designed for residential rent under a normal tenancy. Short stays involve services such as cleaning, linen, check-in and sometimes meals, so the income is generally treated as business income. Check your own situation with KRA or a tax agent, because the line between a rental and a business depends on the services you provide.

The two main routes

The annual route. You add up the year's income, subtract allowable costs such as cleaning, platform commission, utilities, repairs, supplies, insurance, furniture wear and tear and loan interest, and pay income tax on the profit at the individual rates. This is cheaper when your costs are high.

Turnover tax. If your annual gross income is between KES 1 million and KES 25 million, you may be able to pay 3% of gross income each month with no deduction for costs. This is simpler and cheaper when costs are low. See turnover tax for small businesses.

The Airbnb and short-stay income tax calculator shows both for your own numbers, so you can see the saving.

An example

A host earns KES 1,800,000 a year from a furnished apartment, pays KES 360,000 in platform commission and KES 540,000 in other costs. Turnover tax would be 3% of 1,800,000, which is KES 54,000. The annual route taxes a profit of KES 900,000, which comes to much more. With the same income and very high costs the answer could reverse, which is why the comparison matters.

Platform income and fees

Platforms pay you net of their commission, but the tax base may be the gross booking value. Keep the platform's earnings statements, and record the commission as a cost if you use the annual route. Foreign-currency payments need a consistent exchange rate, which you should note.

VAT

Accommodation supplied as a business can be standard-rated for VAT once your taxable supplies pass KES 5 million in 12 months. Residential long-term rent is exempt, but short stays may not be. Check with the VAT registration checker and read VAT for small businesses.

Records to keep

Keep every booking and payout statement, receipts for supplies and repairs, utility bills and loan statements. The free daily takings and expenses log suits a single property, and the monthly income and expense planner works for several units. The tax records checklist and document log shows what to keep, and the turnover versus annual tax comparison workbook helps you choose.

Other considerations

  • County licences or permits may apply to short-stay accommodation.
  • Tourism levies may apply to some operators.
  • If you rent out only a room in your own home, ask KRA how it is treated.

Read monthly rental income tax or annual tax if you also have long-term tenants, and the records every landlord should keep.

Tax treatment depends on the facts. Confirm it with KRA or a registered tax agent.

Common questions

Is Airbnb income treated as rent or as a business? It depends on the services you provide. A plain let of a furnished home looks like rent, while daily cleaning, meals and similar services look like a hospitality business. The classification decides which tax route and which expenses apply, so keep a record of what you offer guests.

Do I need to charge VAT on short stays? Accommodation supplied as a hospitality service is generally taxable, and a business whose taxable sales reach the VAT threshold must register. Residential rent is treated differently, so confirm how your listing is classified before deciding.

What records should a host keep? Keep the booking platform's payout statements, your own booking calendar, receipts for cleaning, utilities, repairs and furnishing, and your M-Pesa or bank statements. These support both the income you declare and the costs you deduct.