What is Residential Rental Income?
This is tax payable by resident persons on residential rental income accrued or derived in Kenya where the rent income is between Kshs. 144,000 (Kshs. 12,000 per month) and Kshs. 10 million per annum.
What is the Tax Rate?
The rate of tax is 10% on the gross rent received and is payable when landlords receive rent from their tenants either monthly, quarterly, semi-annually or annually. However, returns must be filed monthly.
No expenses, losses or capital deduction allowances shall be allowed for deduction from the gross rent.
How do I file for Residential Rental Income?
Rental Income is filed on or before the 20th of the following month. For example, rent received in January is declared and tax paid on or before 20th February.
Landlords with rental income below Kshs. 144,000 or above Kshs. 10 million per year shall be required to file annual income tax returns and declare this rental income together with income from other sources.
Complete a monthly tax return online via iTax by declaring the gross rent and tax payable will be computed automatically at a rate of 10%.
For any month that the landlord does not receive any rent he/she shall file a NIL return.
Residential rental income is final tax therefore, persons are not required to declare the same in their annual income tax returns.
How do I pay for Residential Rental Income?
After filing the return online via iTax, generate a payment slip and present it at any of the appointed KRA banks to pay the due tax.
After filing the MRI online return, generate a payment slip as follows;
- Select new payment registration
- Select tax head – Income tax
- Select tax subhead – Income Tax Rent Income
- Select payment type – Self assessment
- Select tax period
- Select mode of payment
- Click submit and
- Make payment following the guidelines on the payment slip.
You can also pay via Mpesa.
Use the KRA Pay bill number 572572.
The Account Number is the Payment Registration number quoted at the top right corner of the generated payment slip.
What is the penalty for late filing and paying?
Date: Returns are filed and tax payable on or before the 20th of the following month.
Penalty on filing: Late filing of MRI returns attracts a penalty of:
- 2,000 or 5% of the tax due whichever is higher for individuals
- 20,000 or 5% of the tax due whichever is higher for corporates
Penalty on paying: 5% of the tax due and a late payment interest of 1% per month on the unpaid tax until the tax is paid in full.