How to file MRI tax in Kenya: a complete guide for landlords (2026)

If you own residential property in Kenya and rent it out, you're almost certainly liable for Monthly Rental Income (MRI) tax. The rules look straightforward on KRA's website, but get the wrong rate, file late, or pick the wrong regime, and you can end up paying more than you need to — or worse, attracting penalties.

This guide covers everything a Kenyan landlord needs to know about MRI in 2026: the current rate, who's liable, exactly how to file on iTax, deadlines, penalties, and when you should opt out of MRI in favour of the annual regime instead.

What is MRI tax?

Monthly Rental Income tax is a simplified tax regime introduced in 2016 specifically for residents earning rent from residential property in Kenya. The idea was to make compliance easier for landlords than declaring rent on the annual income tax return.

MRI is governed by Section 6A of the Income Tax Act, Cap 470. It applies to:

• Resident individuals and resident companies
• Rental income from residential property only — not commercial
• Annual rental income between KES 288,000 and KES 15,000,000

Below KES 288,000 per year, no MRI is due. Above KES 15,000,000, you fall outside MRI entirely and must declare rent on your annual income tax return alongside any other income.

The current MRI rate is 7.5%

This is where many landlords get tripped up. Older articles, older KRA pages, and even some accountants still quote the old rate of 10%.

The MRI rate has been 7.5% of gross rent received since 1 January 2024, following the Finance Act 2023.

If you're paying 10%, you're overpaying. If you owe back-tax for periods after January 2024 and were charged at 10%, you may have grounds for a refund — speak with a tax advisor.

Important to note: MRI is calculated on gross rent, not net. You cannot deduct expenses, agent fees, repairs, or any other costs. The trade-off is simplicity — no books to keep, no allowable expenses to track. That's why it's called a "final tax."

Worked example

Say you own three rental units, each bringing in KES 20,000 per month. Your gross monthly rent is KES 60,000, and your annual rent is KES 720,000.

• You're above the KES 288,000 threshold ✓
• You're below the KES 15,000,000 ceiling ✓
• You qualify for MRI

Monthly tax due: KES 60,000 × 7.5% = KES 4,500

Annual tax: KES 54,000

That's it. No expenses to deduct, no annual return needed for that rental income (it's final tax), no fuss.

How to file MRI on iTax: step by step

Before you start

You need:

• A KRA PIN
• iTax login credentials
• Your gross rent figure for the month
• Property details registered on iTax (do this once — see below)

Step 1: Register your property (one-time setup)

Before your first MRI filing, register each rental property on iTax:

1. Log in to iTax at itax.kra.go.ke
2. Click Registration tab
3. Select Register Property Details
4. Click Next
5. Section A auto-fills with your details. Fill Section B with your property information — type (residential), location, number of units, expected monthly rent
6. Submit

Step 2: File the monthly return

Each month, by the 20th of the following month:

1. Log in to iTax
2. Click the Returns tab → File Return
3. Select obligation: Income Tax — Rental Income
4. Choose Original Return (or Amended if correcting a previous return)
5. Your registered properties auto-populate. Enter the gross rent received that month for each property
6. iTax automatically calculates the 7.5% tax due
7. Submit the return

Step 3: Generate a payment slip and pay

1. Click the Payments tab → New Payment Registration
2. Tax head: Income Tax
3. Tax sub-head: Income Tax — Rent
4. Payment type: Self-Assessment Tax (since you've already filed)
5. Enter the tax period (month and year)
6. Click Add, then choose your payment mode
7. Submit to generate a unique Payment Registration Number (PRN)
8. Pay via M-Pesa Paybill 222222, your bank, or any KRA-approved channel — using the PRN as the account number

Step 4: File a NIL return for empty months

If a property was vacant for the whole month and you received no rent, you still must file. Submit a NIL return rather than skipping the filing — skipping triggers a late-filing penalty even if zero tax was due.

Deadlines and penalties

The deadline is the 20th of the following month. So January's rent is filed and paid by 20th February, February's by 20th March, and so on.

Miss the deadline and you face two penalties stacked on top of each other:

• Late filing: KES 2,000 or 5% of the tax due, whichever is higher (individuals). KES 20,000 or 5%, whichever is higher (companies)
• Late payment: 5% of the tax due as a one-off penalty
• Late payment interest: 1% per month on the unpaid amount until you pay

So a small KES 4,500 monthly bill quickly grows into a much bigger problem if ignored. Filing on time, even with NIL returns, is the cheapest discipline you can have.

When you should opt out of MRI

MRI is the default for residential landlords earning between KES 288,000 and KES 15,000,000 a year. But you can choose to opt out and use the annual regime instead — by writing formally to the Commissioner.

Why would you?

Under the annual regime, you can deduct genuine expenses — repairs, insurance, agent fees, mortgage interest, depreciation, even land rates. Your taxable income is gross rent minus expenses, then taxed at the individual graduated bands (10% / 25% / 30% / 32.5% / 35%).

If your rental properties are heavily expensed — recently renovated, financed with a mortgage, professionally managed — the annual regime can be cheaper than the flat 7.5% MRI.

A quick rule of thumb

If your allowable expenses come to more than about 50% of your gross rent, look hard at the annual regime. Below that, MRI is usually simpler and cheaper.

The decision isn't reversible mid-year — once you opt out, you're under the annual regime for the full tax year. Plan it carefully, ideally with help from an accountant who can run the numbers both ways.

Common MRI mistakes that cost landlords money

Mistake 1: Paying 10% instead of 7.5%

The rate dropped on 1 January 2024. Older guides, including some still-online KRA documents, quote 10%. iTax should default to 7.5% — but always check the calculated tax matches before submitting. If iTax is showing 10%, your obligation may be set to the old rate. Contact KRA support to update.

Mistake 2: Counting only rent collected

MRI is on rent received — but if you charged rent and the tenant defaulted, KRA generally still expects MRI on the contractual rent. Get the bad-debt write-off in writing if you want to exclude unpaid rent from your filing.

Mistake 3: Lumping commercial in with residential

MRI applies only to residential property. If you also let commercial space (a shop, office, godown), that income falls under the annual regime — and may also attract VAT if your annual commercial rent exceeds KES 5,000,000. Mixing the two on one return is a flag for KRA audit.

Mistake 4: Forgetting NIL returns

If a unit is empty for two months, you still file zero — twice. Skipping a month's filing is treated as late filing and triggers the KES 2,000 minimum penalty.

Mistake 5: Not registering properties

You can technically file without property registration, but it makes audits messy and KRA may rebill you based on assumed market rents if your declared figures look low.

Penalties for non-compliance are getting worse

KRA's enforcement has tightened significantly in the iTax era. They cross-reference rental income against:

• Bank deposit records
• M-Pesa transaction history
• Property registration data
• Land rates filings
• Utility company connections

Banks, lawyers, and the Lands office now require Tax Compliance Certificate (TCC) clearance before processing property transfers. If you've been quietly collecting rent in cash without filing, the moment you try to sell or refinance the property is the moment KRA will catch up.

Better to start filing now and bring everything current than have it surface during a transaction.

Tools to make this easier

Filing MRI is procedurally straightforward but easy to get wrong if you're juggling multiple properties or units. Common pain points: tracking who paid what when, handling partial-month rents, generating payment slips for the right tax period.

If you're managing more than 3-4 units, a good spreadsheet template saves hours every month and prevents costly errors. Karatasi's Rental Income Tracker is built specifically for Kenyan landlords — it handles multiple properties and units, calculates MRI at 7.5% automatically, compares MRI vs annual regime side-by-side so you know which costs less, flags the VAT threshold for commercial rent, and tracks rent collection so empty months are easy to spot.

Whether you use our template or build your own, the core principle stays the same: keep good records, file every month even when zero, pay on time, and review your regime choice annually.

Quick reference

• Rate: 7.5% of gross rent (since 1 Jan 2024)
• Applies to: Residential rental income, residents, KES 288k–15m per year
• Filing deadline: 20th of the following month
• Filing platform: iTax (itax.kra.go.ke)
• Payment Paybill: 222222
• Penalty for late filing: KES 2,000 or 5% (whichever is higher)
• Penalty for late payment: 5% + 1%/month interest
• Final tax: Yes — no annual return needed for the same rental income

One more thing: tax rules change with each Finance Act. The information in this article is current as of January 2026. If you're reading this much later, double-check the current rate at kra.go.ke before filing.