The Kenya Revenue Authority is preparing to flip the switch on residential rental income tax. Under the 2026 Draft Income Tax (Residential Rental Income Tax) Regulations, registration on the Electronic Rental Income Tax System — eRITS — would move from voluntary to mandatory for every resident landlord earning residential rental income, with KRA aiming to grow annual collections from roughly KSh 14 billion today to a target of KSh 80 billion. The proposal has been covered widely in the Kenyan press, including Business Daily, NTV Kenya, and Tuko.
If you own residential rental property in Kenya, eRITS will eventually be the platform you live in: registered properties, automatic tax calculation, and real-time reconciliation against the data KRA pulls from eCitizen and eTIMS. This guide explains what the regulations propose, who they affect, what the deadlines and penalties look like, and — most importantly — how to get your rental data into the shape eRITS expects so the eventual switch is a non-event.
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What Is KRA eRITS?
eRITS — the Electronic Rental Income Tax System — is KRA's purpose-built platform for residential rental income. It is the rental-specific sibling of eTIMS: where eTIMS handles electronic tax invoices for any taxable transaction, eRITS handles the property, unit, lease, and rent data that underpins a landlord's Monthly Rental Income (MRI) return.
Landlords list each property on eRITS, attach the units inside it, link the tenants occupying those units, and the platform calculates the 7.5% MRI tax due on every rent collection. The data does not sit in a silo. eRITS is designed to integrate with eCitizen for identity and property verification and with the eTIMS invoicing flow so that what a landlord declares matches what tenants have been invoiced and what was actually paid.
That last point is the policy intent behind the platform. Rental income has long been one of Kenya's most under-reported income categories, and KRA's stated goal with eRITS is to close that gap by making the data itself the audit. If a tenant's eTIMS invoice says KSh 30,000 of rent was paid in April but the landlord's eRITS record only declares KSh 10,000, the system flags the mismatch automatically — long before any officer is involved.
What the 2026 Draft Regulations Propose
The 2026 Draft Income Tax (Residential Rental Income Tax) Regulations would convert eRITS from a voluntary tool into the default rail every residential landlord runs on. The headline changes:
- Mandatory property listing. Every property generating residential rental income must be registered on eRITS. The platform becomes the system of record for the property, its units, and the tenancies inside them.
- A clear rental-income band. The MRI regime applies to gross annual rental income between KSh 288,000 and KSh 15,000,000, taxed at a flat 7.5% on gross rent received.
- Automatic tax calculation. Once a property is listed and rent is recorded, eRITS calculates the tax due — replacing the spreadsheet maths that produces most rental-income filing errors today.
- Real-time data matching. eRITS cross-references the rent data landlords declare against tenant-side data flowing in from eTIMS and eCitizen. Discrepancies are flagged for follow-up rather than discovered at audit.
- Mandatory compliance with set filing windows. Returns are filed and tax paid by the 20th of the month following the month in which rent was received, in line with the existing MRI rules.
Per Kenyan press coverage, KRA's collection target under the new regime is roughly KSh 80 billion a year, against current annual rental-income collections of approximately KSh 14 billion. The gap is the size of the under-reporting problem KRA believes mandatory registration will close.
Who Must Register
The draft regulations cast a wide net but draw clean lines around the MRI band. Read the categories below to find where you sit.
Resident Individual Landlords
If you are tax-resident in Kenya and earn residential rental income with a gross annual figure between KSh 288,000 and KSh 15,000,000 — that is roughly KSh 24,000 to KSh 1,250,000 per month — you fall squarely inside the MRI band and would be required to register on eRITS once the regulations take effect.
Partnerships
Partnerships earning residential rental income within the MRI band are equally covered. The partnership lists the properties, but each partner's share of the rental income is reflected in their personal tax position.
Resident Corporate Landlords
Resident companies earning residential rental income inside the MRI band are also captured. Where a company's residential rental gross exceeds KSh 15,000,000, it falls outside the MRI regime and is taxed under the standard rental-income rules — but the property listing requirement still drives the underlying data the standard regime relies on.
Diaspora and Non-Resident Landlords
Non-resident landlords are taxed under separate rules (typically a 30% withholding on gross rent), so the MRI regime — and therefore eRITS in its current draft form — primarily targets resident landlords. Diaspora Kenyans who remain tax-resident for the income they earn in Kenya should plan as resident landlords.
Below KSh 288,000 a Year
If your total gross residential rental income is below the KSh 288,000 annual threshold, you remain outside the MRI regime — but the moment you cross that figure during a year, the registration obligation kicks in.
Deadlines & Penalties
Two dates anchor the eRITS calendar.
The first is the 15th of the following month, the practical cut-off many landlords use to confirm rent receipts, reconcile M-Pesa, and prepare the return. The second is the hard deadline: file and pay by the 20th of the month following the month in which rent was received. A landlord collecting April rent files and pays the April MRI tax by 20 May.
Missing the window triggers the standard penalty stack under the Tax Procedures Act:
- Late filing — KSh 20,000 or 5% of the tax due, whichever is higher.
- Late payment — 5% of the tax due as a penalty, plus 1% compounding interest per month on the outstanding balance.
- Failure to register — under Section 75 of the Tax Procedures Act, a fine of up to KSh 100,000 or imprisonment for up to six months. KRA typically pursues the financial penalty first, with prosecution reserved for repeat or large-value cases.
- Knock-on effects — late-paid MRI accrues interest until cleared, and unmatched eTIMS invoice data can trigger follow-up assessments independent of the eRITS return itself.
The penalties are not theoretical. Once the regulations are gazetted, the same enforcement machinery that has driven KRA's eTIMS expansion applies here. The cheapest hour a landlord will spend in 2026 is the one used to register a property and reconcile the data behind it.
eRITS vs eTIMS — How They Connect
The two systems are easy to confuse, so a clean mental model helps:
- eTIMS = the invoice layer. Every rent payment a tenant makes should be supported by an electronic tax invoice issued through eTIMS. The invoice carries a unique number and a QR code KRA can verify, and a copy is transmitted to KRA at the moment it is issued.
- eRITS = the rental-income reporting layer. The platform stores the property, unit, and tenant data, calculates the 7.5% MRI tax, and is the place the return is filed and the tax is paid.
The two layers are designed to talk to each other. The eTIMS invoice tells KRA what the tenant was charged. The eRITS return tells KRA what the landlord declares. If those numbers disagree, the discrepancy surfaces automatically. For landlords, that means there is no longer any value in keeping a "real" set of books and a "filed" set — the platforms reconcile each other.
In practice, most residential landlords in Kenya should expect to operate both systems in parallel: issue eTIMS invoices for every rent collection, then file the monthly MRI return through eRITS. Pulling that off without losing your weekend requires the underlying property and payment data to be clean to start with — which is the part most landlords currently get wrong.
Getting Your Rental Data eRITS-Ready with Pangoni
The single biggest thing a landlord can do today — before the regulations are gazetted, before the first eRITS API call goes live, before any deadline pressure — is to stop tracking rent in spreadsheets and group chats and start keeping a single, structured record of every property, unit, lease, tenant, and payment. That record is exactly what eRITS will eventually expect to ingest.
Pangoni is built to be that record. Here is what running on Pangoni looks like, mapped to the eRITS data model:
A Clean Property and Unit Master
Every property you manage is registered with its address and the units inside it. Each unit carries its own rent, deposit, lease dates, and tenant — the same primary keys eRITS uses to identify a rental. Multi-property and multi-owner portfolios share one schema, so when registration day arrives you are exporting a structured list, not retyping a spreadsheet.
Auto-Generated Invoices and Receipts
Pangoni's digital invoicing system issues an invoice for every rent cycle, and a receipt for every payment received — each linked to the right unit, tenant, and lease. The invoices are formatted to feed directly into the eTIMS layer. When the integration matures, the same invoice that printed for your tenant is the one feeding KRA's matching engine.
M-Pesa Reconciliation Without the Manual Rebuild
The reason most landlord MRI returns disagree with KRA's numbers is M-Pesa. Tenants pay through paybills, tills, agency banking, and direct deposits, and the references they enter are inconsistent. Pangoni's automated payment reconciliation matches every M-Pesa payment to the right tenant and invoice the moment it lands, so your "what was actually paid" picture matches your "what was invoiced" picture by the time the 20th comes around.
Export-Ready MRI Reports
The reporting tools generate monthly and annual rental-income summaries broken down by property, unit, and tenant — in the shapes KRA's filing portals expect. Today that report makes your eTIMS reconciliation easy. Once eRITS integration arrives, the same report is your submission payload.
An Audit Trail That Goes Back Five Years
KRA can audit rental income going back five years. Pangoni keeps every invoice, receipt, lease, deposit movement, and tenant communication timestamped and searchable, so a request that used to mean a weekend in WhatsApp history takes minutes. The audit trail is also the asset that makes a future eRITS migration safe — you are moving from a system that already carries the truth.
One Source of Truth, Two KRA Systems Fed
When eTIMS, eRITS, and your own books all draw from the same Pangoni record, the three numbers cannot disagree. That is the readiness story: not a one-time integration sprint when the regulations are gazetted, but a steady-state where your data is already in the shape KRA wants. Landlords running on Pangoni today get that posture for the price of a free trial — see the landlord pricing for the plan that fits your portfolio.
6-Step Readiness Checklist
If you do nothing else after reading this guide, work through these six steps. None of them require the regulations to be law first.
- Confirm your KRA PIN is active. Log in at itax.kra.go.ke. A dormant PIN cannot register on eRITS, and reactivation is the slowest step for landlords who hit a deadline late.
- Inventory every property and unit. One row per unit: address, rent, deposit, lease start and end. If you cannot produce that list in five minutes, the data is not ready.
- Map every tenant to a unit and a lease. Each unit needs the current tenant, their phone number, and their KRA PIN where available. eRITS and eTIMS both lean on this link.
- Move rent collection to traceable rails. A dedicated M-Pesa Paybill or Till for rent — separate from personal finances — turns reconciliation from a guess into a lookup.
- Switch from receipt books to digital invoices and receipts. Even before eRITS integration matures, every rent collection should leave a digital invoice and a digital receipt. Pangoni issues both automatically; if you are not on a PMS yet, eTIMS Online is the minimum.
- Run a monthly close. By the 15th of every month, confirm invoices match payments and your monthly rental-income summary matches your bank and M-Pesa statements. By the 20th, file and pay. The whole loop should take an hour, not a weekend.
Frequently Asked Questions
eRITS is the Electronic Rental Income Tax System, a KRA platform purpose-built for residential rental income. Landlords list each property and unit on the platform, and the system calculates and tracks the 7.5% Monthly Rental Income tax automatically. eTIMS is the broader Electronic Tax Invoice Management System used to issue tax-compliant invoices for any taxable transaction. The two systems are complementary: eTIMS handles the invoice you give your tenant, while eRITS handles the rental-income return you file with KRA. Under the 2026 draft regulations, residential landlords are expected to be registered on eRITS in addition to issuing eTIMS-compliant invoices.
The 2026 Draft Income Tax (Residential Rental Income Tax) Regulations propose mandatory eRITS registration for resident individuals, partnerships, and corporate landlords earning residential rental income. The Monthly Rental Income tax band targets gross annual rental income between KSh 288,000 and KSh 15,000,000, taxed at 7.5% of gross rent. Landlords below KSh 288,000 a year fall under the personal-income tax threshold and are not required to register, while those above KSh 15,000,000 fall outside the MRI regime and pay tax under the standard rental-income rules.
The 2026 draft regulations move eRITS from voluntary to mandatory once they are gazetted. Affected landlords are expected to register their properties on the platform, then file and pay the 7.5% MRI tax by the 20th of the month following the month in which rent was received. Failure to register, file, or pay on time attracts the standard Tax Procedures Act penalties: a 5% late-payment penalty on the tax due, KSh 20,000 or 5% of the tax due (whichever is higher) for late filing, and 1% compounding monthly interest on outstanding amounts. Persistent non-registration can additionally trigger the KSh 100,000 penalty under Section 75 of the Tax Procedures Act.
Yes. eRITS and eTIMS solve different problems. eTIMS is the invoicing layer — every rent payment you receive should be supported by an eTIMS-compliant electronic invoice issued to the tenant. eRITS is the rental-income reporting layer — it captures the property, unit, tenant, and rent data so KRA can match what you report against what the eTIMS invoices say. Most landlords will run both: eTIMS for invoices and receipts, eRITS for property registration and the 7.5% MRI return. Property management software can feed both systems from a single source of truth so the data lines up.
Pangoni gets your rental data into the shape eRITS expects long before integration goes live. The platform stores a clean record of every property, unit, lease, tenant, rent charge, M-Pesa payment, and receipt — with the references KRA looks for during reconciliation. When eRITS integration becomes mandatory, you are not scrambling to dig through M-Pesa statements or rebuild a tenant list in a spreadsheet — your data is already structured, exportable, and reconciled. Landlords can start free and have their portfolio audit-ready within a single billing cycle.
The eRITS rules are still draft — the time to get your data ready is now. Pangoni gives you a clean property, unit, tenant, invoice, and payment record that maps directly onto what KRA's platform expects, so the eventual switch is a non-event rather than a fire drill.
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Already on top of eTIMS? Read our complete KRA eTIMS compliance guide, or talk to our team about getting your portfolio onto Pangoni before the regulations are gazetted.