Monthly Rental Income (MRI) tax is the simplified rental tax regime that most Kenyan residential landlords now fall under. It replaced the older system of declaring rental income alongside other taxable income, and is intended to be straightforward enough that a landlord can file it themselves — without an accountant, without a complex return, and without surprises at year-end.
The catch is that it has to be done every month, on time, with the right supporting records. For most landlords, that is a workflow problem, not a tax problem. This guide walks through what MRI is, who it applies to, how to calculate and pay it, what changed in 2026 with eRITS, and how to put the filing on autopilot.
What is Monthly Rental Income Tax?
Monthly Rental Income tax was introduced by the Finance Act 2015 and amended several times since. It is a flat-rate tax on gross residential rental income — meaning you pay on the rent collected, not on a profit figure after expenses. The rate is currently 7.5% (reduced from the original 10% by the Finance Act 2023).
The key features:
- Applies to residential rental income only — commercial rent uses a different regime.
- Annual gross rent between KSh 288,000 and KSh 15,000,000. Below that floor, you fall under the regular tax bands. Above the ceiling, you file standard returns with deductions.
- Flat rate of 7.5% of gross rent — no deductions for expenses.
- Due by the 20th of the month following the month the rent was earned.
- Filed online via KRA's iTax / eRITS portal.
Who is liable to pay MRI?
You owe MRI if you are a Kenyan resident landlord receiving rent from residential property and your annual gross rental income falls within the KSh 288,000–15,000,000 band. The threshold applies to your total rental income across all your properties, not per property.
- Below KSh 288,000/year — you fall outside MRI and declare rent under the general PAYE / individual income tax bands. Most landlords with one bedsitter or a single rented room sit here.
- KSh 288,000–15,000,000/year — you are in the MRI bracket. Filing is monthly at 7.5% of gross rent.
- Above KSh 15,000,000/year — you exit MRI and file regular corporate or individual income tax returns, deducting allowable expenses. Most landlords at this scale operate through a company.
Joint ownership is split per the ownership share. If you and a sibling own a duplex 50/50, the rent is split 50/50 for MRI purposes, and each of you files your own share. Diaspora landlords with property in Kenya are also liable; see our diaspora landlord solution for the practical filing workflow from abroad.
How to Calculate MRI
The arithmetic is the simple part. The 7.5% applies to gross rent received in the month, with no deductions. If you collected KSh 240,000 in rent during April 2026, your MRI for April is:
KSh 240,000 × 7.5% = KSh 18,000
That KSh 18,000 is the MRI tax due, payable by 20 May 2026 (the 20th of the following month). The "gross" qualifier is important — there is no deduction for caretaker salary, repairs, service charges, or interest on a mortgage. That is the trade-off for the simplified rate: a low flat percentage in exchange for no expense deductions.
Two practical points for the calculation:
- What counts as rent received? Rent actually received in the month — not invoiced. If a tenant is in arrears for March and pays in April, the MRI on that rent is due with the April filing, not the March one.
- Deposits are not rent — a security deposit held against damage and refundable at the end of the tenancy is not taxable income. Only treat it as rent if you actually apply it to rent (e.g., last-month deposit).
Filing in 2026: eRITS and the New Portal
Until 2025, MRI was filed through KRA's existing iTax portal under the "rental income" return type. From 2026, KRA is migrating residential rental landlords onto the new eRITS (Electronic Rental Income Tax System) portal — a dedicated workflow for rental landlords with mandatory registration for anyone in the MRI band.
What this means for your monthly filing:
- You register once on eRITS to confirm your landlord status and property list.
- Monthly filing happens through eRITS rather than the generic iTax rental return.
- Receipts you issue to tenants must be eTIMS-compliant — covered in our KRA eTIMS guide.
- eRITS is intended to cross-check rent collected against the rental bookings, deposit registers, and tenant records you hold — meaning clean monthly records are now operationally necessary, not just useful.
For the full eRITS detail and the 2026 timeline, see our dedicated guide: KRA eRITS for Landlords in Kenya (2026).
How to Pay MRI
Payment goes through KRA's payment partners using a Payment Registration Number (PRN) generated when you file the return:
- Log in to iTax / eRITS and file the monthly MRI return.
- The system generates a PRN for the amount due.
- Pay the PRN via M-Pesa Paybill (572572 for KRA), bank transfer, or RTGS at any major bank.
- Retain the M-Pesa or bank receipt — it is your proof of payment for the audit trail.
Payment must be made by the same 20th-of-the-following-month deadline as the filing. Filing without paying does not save you from penalties — the return is only treated as complete when the tax is paid.
Penalties for Late or Missed Filing
The MRI penalty regime is deliberately straightforward and uncomfortable enough to discourage late filing:
- Late filing — 5% of the tax due, with a minimum of KSh 10,000 for individuals (KSh 20,000 for companies).
- Late payment — 5% of the tax due, plus interest at 1% per month on the unpaid amount.
- Failure to register for MRI or eRITS once liable — KRA can impose fines and back-assessments of tax due from the date you became liable, with interest.
- Persistent non-compliance — KRA can issue agency notices to tenants, banks, or M-Pesa to withhold rent directly to recover the tax. This happens.
On a KSh 18,000 MRI bill, being one month late costs you a minimum of KSh 10,000 in penalty plus interest — meaning the late-filing fine is often larger than the tax itself for smaller landlords. The simplest way to avoid all of this is to automate the monthly filing.
Records You Must Keep
KRA expects you to be able to produce:
- A rent register showing every tenant, every property, and every payment received in the period.
- eTIMS-compliant receipts issued to tenants.
- Lease agreements for the tenancies that generated the rent.
- Bank statements or M-Pesa transaction logs showing the rent received.
- Filed MRI returns and proof of payment (PRN receipts).
The retention period is five years after the end of the tax period to which the records relate. For a property let from 2023 to 2026, you should be able to produce the 2023 records until 2028.
Automating MRI with Property Management Software
For landlords with even a small handful of units, the monthly cadence of MRI filing — combined with eTIMS receipting, eRITS registration, and five-year record retention — is more workflow than tax. Pangoni handles the workflow side end-to-end:
- Automatic rent register — every M-Pesa or cash payment is recorded against the right unit, with date and amount.
- eTIMS-compliant receipts — auto-generated for every rent payment, available to the tenant by SMS, retained in your records.
- One-click MRI summary — produces the monthly gross rent figure with the supporting transaction log attached, ready to enter into eRITS.
- Five-year retention by default — nothing is deleted; all rent records, receipts, leases, and bank reconciliations remain accessible.
- Filing reminders — pre-due-date reminders on the 15th of every month so you never miss the 20th deadline.
See Pangoni's eTIMS integration and lease management for the underlying feature detail.
MRI for Diaspora Landlords
If you own residential rental property in Kenya but live abroad, MRI still applies — KRA's position is that the property's tax situs is Kenya, regardless of where the owner resides. You need a Kenyan KRA PIN, you need to register on eRITS, and you need to file every month.
The practical hurdle for diaspora landlords is workflow, not liability — needing visibility on rent collected, M-Pesa-banked, and tenant statements while being five or eight hours offset from your caretaker. Pangoni's diaspora landlord workflow handles this directly: live rent visibility from anywhere, automated MRI summary, and one-click export to file through eRITS.
Commercial Property is Different
MRI is a residential regime. If you let commercial premises — offices, shops, warehouses — the tax treatment is different. Commercial rent income goes into your standard income tax return with the usual deductions for expenses, depreciation, and interest. VAT may apply at 16% on the rent, depending on whether you are VAT-registered and the nature of the let.
If your portfolio is mixed, you split the income between the two regimes. The residential portion goes to MRI; the commercial portion to your annual return.
Frequently Asked Questions
7.5% of gross monthly rental income, as reduced from the original 10% by the Finance Act 2023. Applies to residential rental income between KSh 288,000 and KSh 15 million per year. No deductions are allowed against this rate — it is a flat percentage of gross rent received.
The 20th of the month following. For rent received in March 2026, MRI is due by 20 April 2026. If the 20th falls on a weekend or public holiday, the deadline shifts to the next working day, but don't count on it — file the working day before to be safe.
You file MRI on rent received, not rent invoiced. If your tenant is in arrears for the period, the rent doesn't appear on that month's MRI — but you still need to file a nil return (or a return showing the rent you did collect from other tenants) to keep your account compliant. The unpaid rent eventually appears on the MRI for the month it is collected.
MRI is the tax itself — 7.5% of gross
residential rent.
eTIMS is the electronic invoicing system —
the receipts you issue to tenants must be eTIMS-compliant.
eRITS is the new (2026) portal where MRI is
filed — replacing the older iTax rental income return.
All three need to work together: you collect rent, issue an
eTIMS receipt, file via eRITS, and the underlying tax is MRI.
No. MRI is a flat rate on gross rent — that is the trade-off for the simplified rate. Caretaker salary, repairs, service charges, mortgage interest, agent commission — none are deductible under MRI. If your expenses are very high relative to rent, you can elect to file under the standard income tax regime instead and claim deductions there, but you need to register that election with KRA.
You exit the MRI regime and move to standard income tax with full deductions. Most landlords at this scale operate through a limited company for the tax treatment. The transition is not automatic — you must notify KRA and update your filing regime.
Related Resources
- KRA eTIMS for Kenyan Landlords — Complete Compliance Guide (2026)
- KRA eRITS for Kenyan Landlords (2026) — What the New Rules Mean
- Pangoni's KRA eTIMS Integration
- Diaspora Landlord Software
Stop reconciling MRI by hand. Pangoni auto-generates the monthly summary, retains all your supporting records, and reminds you before the 20th every month.