Understanding the Basics:

KRA requires residents who earn rental income to pay taxes on that income. The applicable tax rate depends on the annual rental income amount. Here’s a breakdown:

• • Between Kshs. 288,000 (Kshs. 24,000 per month) and Kshs. 15,000,000 per year: This falls under the Monthly Rental Income (MRI) tax regime. A flat rate of 10% is levied on the gross rent received.

• • Above Kshs. 15,000,000 per year: This falls under the annual income tax regime. Landlords declare their rental income alongside income from other sources and pay taxes based on the applicable income tax bracket.

Keeping Up with KRA Updates:

The Kenyan government recently reduced the upper threshold for MRI from Kshs. 10 million to Kshs. 15 million. This change took effect on January 1st, 2024. Staying updated on such policy changes ensures you comply with the latest tax regulations.

Filing and Payment:

For MRI, landlords must file monthly returns and pay taxes online through the iTax platform. The deadline is the 20th day of the following month after receiving rent. Remember, filing nil returns for months with no rental income is crucial.

The Importance of Compliance:

Failing to comply with KRA’s rental income policy can lead to penalties and legal repercussions. Staying compliant ensures you avoid unnecessary hassle and maintains a good standing with the authorities.

Adalia: Your Partner in Tax Compliance

Managing rental income tax can be a complex task. At Adalia, we understand the challenges landlords face. We offer a range of services to help you navigate Kenya’s rental income policy and ensure you fulfill your tax obligations seamlessly.

Here’s how Adalia can help:

• • Tax registration and iTax account setup.

• • Guidance on determining the applicable tax regime for your rental income.

• • Assistance with filing monthly MRI returns and annual income tax returns (if applicable).

• • Staying updated on KRA’s latest policies and regulations.

• • Peace of mind knowing your tax obligations are handled by professionals.

Don’t let rental income tax become a burden!

Contact Adalia today to discuss your specific situation and learn how we can help you navigate the complexities of Kenya’s rental income policy with confidence. Remember, staying compliant with KRA ensures a smooth and stress-free experience.