🏠 Introduction: Do You Earn Rental Income in Kenya?
If you earn money from renting out residential or commercial property in Kenya, you’re legally required to declare and pay rental income tax to the Kenya Revenue Authority (KRA). Many landlords are still unsure how to file, what rate applies, or whether Airbnb and bedsitters are included.
This 2025 guide will break it down in plain language — including tax rates, deadlines, filing steps, and common mistakes to avoid.
🧾 What Is Rental Income Tax?
Rental income tax is charged on money earned from letting out property — whether residential, commercial, furnished, or shared spaces. It’s part of Income Tax under the Income Tax Act (Cap. 470).
There are two main regimes for rental income tax in Kenya:
| Regime | Applies to… | Tax Rate | Frequency |
|---|---|---|---|
| Residential Rental Income Tax (RRIT) | Individuals earning between Ksh 288,000 – 15 million/year | 10% final tax | Monthly |
| Standard Income Tax on Rent | If income exceeds Ksh 15 million/year or if you opt out of RRIT | Graduated rates | Quarterly + annual return |
✅ Who Should File Rental Income Tax?
You must file if you:
- Own rental property in Kenya
- Collect income from short-term lets (Airbnb, serviced apartments)
- Sublet space (even a room)
- Own vacant land with billboards, containers, or events
Note: Even non-residents with property in Kenya must pay tax on that income.
🧮 How Much Tax Will You Pay?
💡 If Under RRIT (Simplified Residential Rental Tax):
- 10% flat rate of gross rent collected — no deductions allowed
- No need to submit expense receipts or claim repairs
- Tax due by the 20th of the following month
Example:
You earn Ksh 50,000 from rent in January 2025.
You pay Ksh 5,000 tax by 20th February.
🧾 When Are Rental Taxes Due in Kenya?
| Obligation | Due Date |
|---|---|
| Monthly RRIT filing | By 20th of next month |
| Standard rental tax (quarterly installment) | 20th of April, June, Sept, Dec |
| Annual return (for standard rental) | By 30th June each year |
🧑💻 How to File Rental Income Tax on iTax (Step-by-Step)
If you’re under RRIT:
🪜 Step-by-Step:
- Log into iTax
- Go to “Returns” > “File Return”
- Select: Income Tax – Rental Income
- Choose: Mode of Filing – Self
- Enter:
- Month and year
- Gross rent received
- Confirm 10% tax is auto-computed
- Submit return and download e-acknowledgment
Note: You must also generate a Payment Registration Number (PRN) and pay via M-Pesa or bank.
📉 Common Mistakes Landlords Make
- ❌ Assuming Airbnb or guesthouse income is exempt
- ❌ Not filing when property is vacant (you still need a Nil return)
- ❌ Using the wrong regime (RRIT vs standard)
- ❌ Forgetting to pay by the 20th — penalties apply
- ❌ Not declaring income held by agents or property managers
📌 What Happens If You Don’t File?
- Penalty for late filing: Ksh 2,000 (individuals)
- Late payment penalty: 5% of tax due
- Monthly interest: 1% compounded
In some cases, KRA may issue estimated assessments or audit your bank/M-Pesa income.
📜 Legal Backing
All provisions are derived from:
- Income Tax Act (Cap. 470), Sections 6A and 35
- Finance Act 2025
- KRA Rental Income Tax Guidelines
❓ FAQs
1. Is Airbnb rental income taxable in Kenya?
Yes. Airbnb income is treated like any other rental income — monthly RRIT applies if under Ksh 15M/year.
2. Do I need to file when I’ve earned no rent?
Yes. You must file a Nil return each month — or face penalties.
3. Can I deduct repairs, agents, and insurance costs?
Only under the standard rental regime (not RRIT).
4. How do I switch from RRIT to standard tax?
Notify KRA via iTax — but you’ll need to maintain full expense records.
5. Can KRA access my M-Pesa or bank to assess rent?
Yes. KRA uses data analytics to match deposits against undeclared income.
🧠 Conclusion: Stay Compliant, Stay Safe
Renting out property in Kenya? Make sure you’re not flying under the radar.
🛡️ Filing and paying your rental income tax on time protects you from penalties, audits, and legal issues.
Need help filing? Contact Ushuru.com for landlord-friendly assistance or download our Rental Tax Checklist today.