Kenya's 7.5% MRI tax for diaspora landlords: the complete 2026 guide

If you own residential property in Kenya and live abroad, the Kenya Revenue Authority is already counting on its 7.5% of your monthly rent. Whether you have ever filed a return or not. Whether your agent has ever mentioned it or not. Here is exactly how Monthly Rental Income tax works, who pays it, when, and the three mistakes diaspora landlords make every single year.

What MRI actually is

Monthly Rental Income tax (“MRI”) is the simplified residential rental income regime introduced by the Finance Act 2015 and amended by the Finance Act 2023. It applies to resident landlords earning gross residential rent up to KES 15 million a year, replacing the regular income tax regime for that bracket. The current rate is 7.5% of gross rent collected, down from 10% before the 2023 amendment.

The two words that matter in that sentence are residential and gross. MRI applies to homes, apartments and other residential lettings. It does not apply to commercial property; that is taxed under the regular income tax regime. The 7.5% is applied to gross rent, not net. You cannot deduct service charge, land rates or repair costs from the figure you tax.

“But I live in London. Am I really a resident landlord?”

This is the question we get most. The wrinkle is that tax residency for the property is not the same as your personal tax residency. KRA looks at where the rental income is sourced. Property in Kenya generates Kenyan-source income, full stop, and that income is taxable in Kenya regardless of where the owner happens to live.

What your personal residency does change is:

• Whether the regular Pay-As-You-Earn or non-resident withholding regime applies in addition to MRI.
• Whether a double-taxation agreement between Kenya and your country of residence (UK, UAE, India, Germany, Canada, USA) gives you a credit on the Kenyan tax against your home-country liability.
• The PIN registration process. Diaspora landlords need a KRA PIN to file MRI; we register clients remotely against their passport and proof of ownership in roughly a week.

Property in Kenya generates Kenyan-source income, full stop. Your personal residency in Dubai or Toronto does not change that.

How MRI is actually filed

The mechanic is straightforward, even if it gets reported as complicated:

1. By the 20th of every month, file an MRI return on iTax for the previous month’s rent collected.
2. Generate a payment slip on iTax. Pay the 7.5% via M-Pesa PayBill 222222 or any partner bank.
3. Keep the e-slip and the bank or M-Pesa confirmation. KRA can and does request these in audit.
4. A nil return is required even in months where the property was vacant. Failing to file the nil return triggers a KES 2,000 penalty per month.

That is it. There are no input deductions, no allowances for depreciation, no offsets for service charge. The tax is deliberately simplified at the cost of being a slightly worse deal in years where you had a major repair bill.

A worked example

Take a 2-bedroom apartment in Kilimani let at KES 180,000 per month. Service charge is KES 25,000 per month, paid by the landlord. Land rates and SRA levies come to roughly KES 35,000 a year.

• Monthly gross rent: KES 180,000.
• Monthly MRI at 7.5%: KES 13,500, due to KRA by the 20th of the following month.
• Service charge and rates: paid in addition, from the remaining rent collected. They do not reduce the MRI bill.

Annual MRI on the same unit, assuming full occupancy: KES 162,000, or about USD 1,260 at current rates. Roughly the cost of one month’s rent.

Three mistakes we see diaspora landlords make

1. Assuming “my agent handles tax”

Many traditional Kenyan property agents charge a management fee, collect rent, and stop there. KRA filings are not part of the contract. The landlord finds out, sometimes years later, that no return has ever been filed in their name and the accumulated penalties are now larger than a year’s rent. We have taken over enough of these properties to know it is the single most common silent failure in diaspora property.

Before signing with anyone, ask one specific question: “Do you file my MRI returns each month, in my name, on my KRA PIN, and send me the e-slip?” If the answer is anything other than “yes”, you are filing them yourself or not at all.

2. Treating service charge as a deduction

Service charge, repairs and management fees are not deductible under MRI. They reduce your real-world net cash, but they do not reduce the 7.5% bill. Landlords sometimes file MRI on net rent and end up under-declaring; KRA has no problem back-assessing this with interest.

If your repair bills are consistently large enough that the 7.5% on gross genuinely hurts, you can elect into the regular income tax regime by writing to your KRA station. It is rarely the right call for a single residential unit, but it exists.

3. Skipping the nil return on vacant months

The KES 2,000 monthly penalty for a missed nil return looks small. It compounds. We have onboarded landlords whose accumulated nil-return penalties were enough to wipe out a full year of profit. The fix is trivial. iTax accepts a nil return in under a minute. It just has to be done every month, on time, vacant or not.

How Goldstay handles it

For every property we manage, MRI is part of the basic service and not a paid extra. Each month we:

• File the return on iTax in your name, on your KRA PIN, before the 20th.
• Withhold the 7.5% from your collected rent and remit it to KRA the same day.
• Attach the e-slip and the KRA receipt to your monthly statement, alongside every other expense and the USD wire confirmation.
• File the nil return automatically in any month where the unit is vacant.

If you do not have a KRA PIN, we register one on your behalf before your first remittance. Passport scan and proof of ownership, no visit to Kenya required, live in roughly a week.

When you should still hire a tax advisor

Three situations where the 7.5% MRI line is not the whole story and you genuinely want a Kenyan tax professional looking at your file:

• Your residential portfolio is approaching the KES 15 million gross rent ceiling. Above that you exit MRI and re-enter the regular regime, which is materially more complex.
• You also own commercial property in Kenya. That income is not under MRI and creates joint-filing complications.
• You expect to sell. Capital Gains Tax (CGT) at 15% on the gain is a separate, one-time exposure that MRI does not touch and that should be planned years in advance.

For everyone else, MRI is a solved problem the moment a competent manager is filing it for you on the 20th every month, in your name, with the receipts on the statement.

If you are not sure whether you are compliant

Send us your KRA PIN and the property address on this form or on WhatsApp. We will pull your iTax history, confirm whether returns have been filed in your name, calculate any outstanding balance and walk you through bringing the file current. There is no charge for that diagnostic and no obligation to switch managers afterwards.

If you also want to see what the same property would actually net you under our management once MRI, service charge and rates are paid, the yield calculator is the fastest way to get a number.