Rental Income Tax

Residential Rental Income Tax - KRA — Rental income tax

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? Rental income tax

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 tax

Rental Income is filed on or before the 20^th of the following month. For example, rent received in January is declared and tax paid on or before 20^th 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.

Kenya Revenue Authority – Rental income tax

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
Then Select tax subhead – Income Tax Rent Income
Select payment type – Self assessment
Select tax period
Then 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? Rental income tax

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 corporate

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.

Phone tripod, UBeesize Portable and Adjustable Camera Stand Holder with Wireless Remote and Universal Clip, Compatible with iPhone, Android Phone, Sports Camera GoPro. Get it on Amazon

How do I account for rental income where there is mixed use of property?

Where the property has both residential and commercial tenants, the income will be treated as follows:

Where the gross annual residential rental income is less than Kshs. 144,000 or more than Kshs. 10 million, all rental income is combined in the annual Income Tax return.
Where the gross annual residential rental income is between Kshs. 144,000 and Kshs. 10 million, this part of the income is accounted for as the residential rent mentioned above, while the commercial part is accounted for through the annual Income Tax Return.

How do I claim expenses on Commercial Rental Income Tax?

Expenses being claimed under the commercial rental income portion should be apportioned in the same ratio as the income of the commercial rent pertains to the total income.

What is the monthly rental income tax?

This is a tax on gross residential rental income between 144,000 and 10,000,000 per annum and the tax is 10% on gross rent payable monthly on rent received.

If my building has commercial properties on ground floor and residential on 1st-4th floor, which rental income tax should I pay?

You may elect to file and pay tax either in the annual regime or the residential part (if the income is between 144,000 and 10,000,000) under the MRI regime while the commercial part under the annual regime.

Do irregular income earners pay taxes?

Every person pays taxes as per the tax obligations registered under their PINs

Is interest income a specified source of income?

Yes

How is KRA handling the issue of Wrong obligations added by cyber people and taxpayers believing cyber cafe?s are our agents.

iTax system restricts the addition of certain obligations, which have to be approved at the stations. There are also sector based training targeting the cyber attendants and taxpayers.

Why is KRA sending defaulter notices to employees who have already been deducted PAYE by their employers upon filling their income tax returns?

This happens where The employer has not filed The PAYE returns in iTax, but with The employee having The evidence of PAYE deduction, The issue is sorted at their tax stations.

Most of the taxpayers are not computer literate and cannot access computers easily. How does KRA expect us to comply?

We advise such taxpayers to seek services at our iTax support centers, Huduma centers and nearest KRA office

The system is very complicated for them, what is KRA doing on this?

KRA is conducting training country wide and There are you tube videos to guide on The same. KRA is also working on simplifying The return filling systems.

Follow the link KRA