This article provides instructions on how to file for Kenyan residential rental income tax. Tax on residential rental income is due from residents (individuals or businesses) when the rent received for using or occupying a residential property is between Kshs 288,000 (Kshs 24,000 per month) and Kshs 15 million per year.
Landlords must file annual income tax returns and reveal their rental revenue along with any other sources of income whether their annual rental income is less than or equal to Kshs 288,000 or Kshs 15,000,000.
Non-residents, landlords making more than Kshs 15 million annually, and taxpayers who want to continue paying taxes on rental income under the current system are exempt from the tax.
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Rate of Residential Rental Income Tax
10% of the gross monthly rent paid is the flat rate applied to residential rental income.
It is due when landlords receive their tenants’ monthly, quarterly, semi-annually, or yearly rent payments. Monthly returns must be filed. The gross rent shall not be reduced by any costs, losses, or capital deduction allowances.
How to File Returns for Residential Rental Income
- On or before the 20th of the next month, rental revenue must be reported.
- By declaring the gross rent in a monthly tax return on iTax, the tax due will be calculated automatically at a 10% rate.
- The landlord is required to file a NIL return for any month in which they do not receive any rent.
- Since residential rental income is considered the final tax, individuals are not required to include it in their yearly income tax forms.
- The new KRA M-service app allows you to file and pay your monthly rental income tax.
Penalty For Late Filing & Late Payment Of Rental Income Tax
Returns should be filed and tax payable on or before the 20th of the following month. Failure to do so will attract a penalty.
1. Late filing penalties
- For individuals, whichever is higher: Ksh 2,000 or 5% of the tax owed.
- For corporations, the higher of Ksh 20,000 or 5% of the tax owed must be paid.
2. Late payment penalties
- 5% of the owed tax.
- Until the full amount of the tax is paid, there is late payment interest at the rate of 1% per month.
