Monthly Rental Income

 

Monthly Rental Income Tax Services

Managing and remitting taxes on rental income can be challenging and time-consuming. At Executive Financial Consultants, we simplify this process for landlords, ensuring compliance with Kenya’s rental income tax regulations. The Monthly Rental Income Tax applies specifically to residential rental income, with landlords required to pay a flat rate of 10% on gross rent received.

Our Services Include:

  • Accurate Income Computation:
    We ensure that the rental income you report is accurate and properly computed.
  • Payment Slip Generation:
    We generate payment slips and advise landlords on the tax amount due.
  • Timely Tax Payments:
    We ensure that tax payments are made on or before the 20th of the following month and filed online through iTAX.

Key Information on Residential Rental Income Tax (MRI):

  • Effective Date:
    MRI has been in effect since January 1, 2016.
  • Legal Framework:
    The Finance Act 2015 introduced Section 6A of the Income Tax Act, establishing a simplified tax regime for rental income.
  • Advantages:
    • Flat tax rate of 10%
    • No complex bookkeeping required
    • MRI is a final tax
  • Eligibility:
    Applicable to individuals and corporates with residential rental income below Kshs.10 million per year.
  • Mixed Income:
    Residential rental income is taxed at 10%, while commercial rental income follows the old tax regime (30% for corporates).
  • Tax Rate:
    A flat rate of 10% on gross rental income. No deductions are allowed.
  • Exemptions:
    • Income below Kshs.12,000 per month or Kshs.144,000 per year
    • Income exceeding Kshs.10 million per year
    • Rental income from commercial properties
    • Non-resident landlords (with proper notification)
  • Partnership Income:
    Each partner pays 10% of their share of the gross rental income, provided it falls within the income limits.
  • Withholding Tax:
    Offset withholding tax credits from your total liability for the month.
  • Payment Timing:
    MRI is payable when rent is received, whether monthly, quarterly, semi-annually, or annually. Payments are due by the 20th of the following month.
  • Nil Returns:
    File nil returns for months when no rent is received.
  • Annual Returns:
    MRI is a final tax and should not be reported again in annual returns. File a nil return if MRI is your only income.
  • MPESA Payments:
    Pay via MPESA using Paybill #572572. Enter the PRN number and amount to complete the transaction.
  • Required Information:
    • LR No.
    • List of current tenants
    • Amount payable for the month
    • Physical address of properties
    • P.O. Box & Postal Code
    • Building name
    • Tenant PINs (optional)

Let Executive Consultants handle your Monthly Rental Income Tax to ensure compliance and ease of management.