Residential Income Tax

The simplified tax regime on residential rental income was introduced in Kenya with effect from 1st January 2016.

It applies to residential rental income ranging from KES 288,000 to KES 15,000,000 per annum. Under this regime, tax is calculated as 10% on gross rent received and is a final tax.

The landlord is required to file a monthly return and make payment by 20th day of the following month.

The penalty for late filing of the monthly return is the higher of 5% of the tax due or KES 2,000 (individuals) or KES 20,000 (company).

The penalty for late payment of tax is 5% of the tax due and accrues interest at 1% per month outstanding

The simplified tax regime does not apply to:

  • Landlords earning more than KES 15 Million per annum
  • Non-resident taxpayers
  • Taxpayers who wish to remain in other tax regimes on their rental income upon writing to the Kenya Revenue Authority (KRA).

In the event that the simplified tax regime is not applicable, the residential rental income is taxed at the either graduated rates for individuals or at corporation tax rate for companies.

In the event of non-compliance in the past, the KRA introduced a Voluntary Tax Disclosure Program (VTDP) with effect from 1st January 2021. A taxpayer qualifies for the VTDP for tax liabilities that were accrued within the period 1 July 2015 to 1 July 2020.  Under the VTDP, the taxpayers stand to benefit with up to 100% relief from penalties and interest, if the principal tax is disclosed and paid in 2021.

The Property Bontique offers fully-fledged real estate tax advisory services. Our highly qualified and experienced personnel will assist you with your tax matters and ensure that you are tax compliant and assist you to analyse and mitigate any tax risks or exposure.

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