Rental income tax calculator Kenya 2026: worked examples

Rental income in Kenya is taxed under either Monthly Rental Income (MRI) at 7.5 percent of gross rent, or normal income tax at progressive rates with legitimate deductions. Most landlords default to MRI; sometimes normal regime is better. Here are the honest 2026 worked examples.

MRI in summary

• Applies to residential property with annual gross rent below defined threshold (KES 15m at time of writing; verify current)
• Tax: 7.5 percent of gross rental income
• No deductions allowed
• Filed monthly via iTax
• Simple and predictable

Normal regime in summary

• Apply if landlord opts in or gross rent exceeds threshold
• Tax on net rental income (gross rent less allowable deductions)
• Allowable deductions: mortgage interest, repairs, insurance, property management fees, depreciation
• Filed annually
• Better for landlords with significant expenses or mortgage interest

Worked examples

Example 1: Single unit, low expenses

• Gross annual rent: KES 600,000
• MRI: 7.5 percent x KES 600,000 = KES 45,000
• Allowable expenses if normal regime: KES 80,000
• Net income normal regime: KES 520,000 (taxed at progressive rates within personal income band)
• MRI is normally simpler and competitive for low-expense residential rental

Example 2: Mortgage-financed unit, high interest

• Gross annual rent: KES 1,200,000
• MRI: 7.5 percent x KES 1,200,000 = KES 90,000
• Mortgage interest: KES 700,000
• Other deductible expenses: KES 120,000
• Net income normal regime: KES 380,000 (taxed at progressive rates)
• Normal regime usually preferable where mortgage interest is high

Example 3: Small portfolio, no mortgage

• Gross annual rent (3 units): KES 2,400,000
• MRI: 7.5 percent x KES 2,400,000 = KES 180,000
• Allowable expenses normal regime: KES 350,000
• Net income normal regime: KES 2,050,000 (taxed at top personal rate)
• Personal income tax on KES 2,050,000 at marginal rates would typically exceed MRI

Company ownership

• Property held in company: corporate income tax 30 percent on net income (25 percent for qualifying SME)
• Cannot use MRI; normal regime applies
• Dividend distribution to shareholders subject to 5 percent withholding

Filing discipline

• Register the rental income on KRA iTax
• File MRI monthly or normal regime annually per opt-in
• Keep records of all rent received and expenses
• Tenant withholding under specific circumstances

Most landlords pay MRI without comparing to normal regime. A small minority would save real money by switching. Worth the annual review.

How Goldstay handles it

For landlord clients we coordinate with tax advisors on annual regime review. Read also our pieces on property taxes Kenya 2026 and personal name vs company.