Residential Rental Income Tax (MRI) in Kenya QA

Questions and Answers for Residential Rental Income Tax (MRI) in Kenya

Your complete guide to understanding the Monthly Residential Rental Income Tax in Kenya for landlords and property owners.

Frequently Asked Questions (FAQs)

Below, we answer the most common questions about MRI tax, including who needs to pay, how it’s calculated, and key compliance tips for landlords in Kenya.

What is Monthly Residential Rental Income (MRI) Tax?

The Monthly Residential Rental Income (MRI) Tax is a simplified tax regime introduced by the Kenya Revenue Authority (KRA) in 2016. This tax applies to gross rental income from residential properties at a rate of 10% per month, designed to streamline tax compliance for landlords and property owners.

Who is eligible to pay MRI tax in Kenya?

Landlords earning between KSh 288,000 and KSh 15 million annually from residential rental income are required to pay MRI tax. This includes both Kenyan citizens and foreign nationals who earn income from rental properties in Kenya. Non-residents must also comply with this tax regulation if they own rental property within Kenya’s borders.

How is MRI tax calculated and filed?

MRI tax is a straightforward 10% tax on gross rental income, without deductions for property expenses. To file:

  • Login to the KRA iTax portal using your PIN and password.
  • Select the “e-Payments” tab and generate a payment slip using the gross rental income amount for that month.
  • Submit your payment by the 20th of each month through M-Pesa, approved banks, or other iTax payment options.

Once payment is made, landlords are advised to retain the receipt as proof of compliance for that month.

What penalties apply for late filing of MRI tax?

Late filing incurs a penalty of 5% of the unpaid tax, along with a 1% monthly interest on the outstanding amount. Persistent non-compliance may lead to audits and further penalties imposed by KRA. To avoid these charges, landlords should prioritize timely filing and set reminders for their monthly payment due dates.

Can landlords deduct expenses under MRI tax?

No, MRI tax does not allow for expense deductions. This tax is based solely on the gross rental income received each month, without allowance for maintenance, repair, or management costs. Landlords needing a more complex tax structure that includes expense deductions may consult with a tax advisor for guidance on potential eligibility under alternative tax systems.

What benefits does MRI tax offer to landlords?

The MRI tax simplifies tax filing by providing a fixed monthly rate and removing complex calculations. It also reduces the administrative burden associated with tax compliance, as it only requires landlords to pay a consistent 10% each month. Furthermore, landlords under the MRI tax are less likely to face extensive audits as compared to those under more complex tax systems.

How can landlords pay MRI tax through M-Pesa?

Landlords can make MRI tax payments via M-Pesa as follows:

  • Access the M-Pesa menu on your mobile device.
  • Select “Lipa na M-Pesa” then “Pay Bill.”
  • Enter the KRA Pay Bill number (usually 572572) and your iTax-generated payment slip number as the account number.
  • Enter the amount to be paid (10% of gross income) and confirm the transaction.

Are non-resident landlords subject to MRI tax?

Yes, non-resident landlords who earn rental income from residential properties in Kenya must also pay MRI tax. This requirement ensures that both local and foreign landlords contribute to the Kenyan tax base on rental income earned within the country.

What happens if rental income exceeds the MRI tax limit?

If a landlord’s annual rental income exceeds KSh 15 million, they are no longer eligible for MRI tax and will be required to comply with regular income tax rates. In such cases, rental income tax will be subject to deductions and rates applied within the general income tax regime, which is usually calculated on a graduated scale.

How can landlords register for MRI tax?

Landlords who meet the criteria for MRI tax can register by logging onto the iTax portal and updating their tax obligations to include MRI. If assistance is required, KRA service centers and support personnel are available to guide property owners through the registration process.

Contact Us for Assistance with MRI Tax

If you need further assistance with Monthly Residential Rental Income Tax in Kenya, Junyan and Associates can help. Contact us today:

Location: Sansora Building, Nakuru, Second Floor, Room 03
Phone: +254 724 786089
Email: info@junyanandassociates.co.ke

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