This is a guide on how to file for residential rental income tax in Kenya. Residential rental income is tax payable by resident persons (individual or company) on rental income earned for the use or occupation of a residential property where the rent income is between Kshs 288,000 (Kshs 24,000 per month) and Kshs 15 million per annum.
Landlords with rental income below Kshs 288,000 or above Kshs 15 million per year shall be required to file annual income tax returns and declare this rental income together with income from other sources.
The tax does not apply to non-residents, landlords earning more than Kshs 15 million per annum and taxpayers who wish to remain in current tax regime on rental income .
Residential Rental Income Tax Rate
Residential rental income is charged at a flat rate of 10% on gross rent received per month.
It is payable when landlords receive rent from their tenants either monthly, quarterly, semi-annually or annually. Returns must be filed monthly. No expenses, losses or capital deduction allowances shall be allowed for deduction from the gross rent.
How To File For Residential Rental Income
- Rental income is filed on or before the 20th of the following month.
- 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.
- You can also file and pay your monthly rental income tax using the new KRA M-service app.
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. Penalty on late filing
- 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.
2. Penalty on late payment
- 5% of the tax due.
- Late payment interest of 1% per month on the unpaid tax until the tax is paid in full.