Rent paid to a landlord can carry withholding tax, which the payer deducts and pays to KRA. Different figures circulate online, including 10 percent for commercial rent. The Income Tax Act as consolidated in mid-2026 is clear: the rate on rent paid to a resident person for immovable property is 7.5 percent of the gross amount, and the rate for a non-resident is 30 percent. This article explains what that means in practice.

The rates

Landlord Withholding rate on gross rent
Resident person (individual or company), any immovable property 7.5%
Non-resident person 30%

The tax is on gross rent, before any deductions. The payer deducts it when paying the rent and pays it over to KRA. Some websites and older guides give 10 percent for commercial property. If you have been withholding 10 percent from a resident landlord, you may have over-withheld, so recompute and correct the next payment after checking with KRA. Our withholding tax on rent calculator uses the current rates.

Who must withhold

Withholding applies to persons appointed as withholding agents or falling into the categories in the law. This commonly includes companies, partnerships, government bodies and managing agents who collect rent. A private individual paying personal rent to a landlord is generally not a withholding agent. The detail and exceptions are in withholding tax on rent for tenants and agents.

When to pay and file

The withholding agent pays the tax to KRA by the 20th of the month after the payment of rent and files the withholding return on iTax. The agent must give the landlord a withholding certificate so the landlord can claim the credit. A late payment is penalised, as explained in KRA penalties and interest explained.

What it means for the landlord

For landlords on annual tax, the tax withheld is a credit against the income tax on the profit. If your total tax is less than the amount withheld, the excess can be refunded or offset. For landlords on Monthly Rental Income tax, the position depends on the circumstances, because the MRI is the final tax on the rent: see MRI or annual rental tax and ask KRA how to avoid double tax when a tenant withholds. In every case:

  1. Ask for a withholding certificate each month.
  2. Record the tax in the monthly rental income tracker.
  3. Claim the credit on your annual return.
  4. Compare the withheld tax with your total using the rental income tax calculator.

What it means for the tenant

If your business is the withholding agent, you must:

  • Deduct 7.5 percent (or 30 percent for a non-resident landlord) from every rent payment
  • Pay the landlord the net amount and the tax to KRA
  • Issue certificates and keep a register, for which the withholding tax certificate register is laid out
  • Include the rent expense in your accounts at the gross amount

If you fail to withhold, the tax can be recovered from you, with penalties and interest, even though the landlord received the full rent. Be careful with agreements that say the tenant pays rent "net of tax": the gross amount for tax is higher than the amount paid, and the maths changes.

VAT on commercial rent

Rent on commercial premises may also carry VAT if the landlord is registered. The VAT is separate from withholding tax and is calculated on the rent. See VAT on commercial rent. Withholding VAT of 2 percent may apply where the payer is an appointed agent: use the withholding VAT calculator.

Correcting past errors

If you used a wrong rate, amend future payments and consider amending past returns on iTax. Keep the working papers that show the correct computation. In any dispute, the Income Tax Act's Third Schedule is the reference, and KRA's pages summarise it.

Quick example

A company pays a resident landlord KES 200,000 a month for an office. Withholding tax is 7.5 percent, KES 15,000. The company pays the landlord KES 185,000 and sends KES 15,000 to KRA by the 20th of the next month. Over a year, the landlord has a credit of KES 180,000 for the annual return.

Frequently asked questions

Is the 7.5 percent the same as Monthly Rental Income tax? They are separate. MRI is a tax the landlord pays on residential rent. Withholding tax is deducted by the payer and is a credit against the landlord's tax.

Does the rate differ for residential and commercial property? For resident landlords, the Act sets one rate for immovable property, so the earlier 10 percent for commercial rent does not apply.

What if the landlord has a tax exemption certificate? A valid exemption from KRA may relieve the payer from withholding. Keep a copy of the certificate.

Can the tenant refuse to withhold? If the tenant is a withholding agent, no. The law makes withholding mandatory.