On or before 5th' is the lingo for most lessors in Kenya.

It is the day the landlord has made, and they shall be glad and rejoice in it. Residential apartments across the city have this date plastered on apartment walls, gates and even gone on to inspire songs; Landlord by Mejja preserved in history as relics of the unavoidable date and its issuers- the almighty landlord. 

Having property developed from the ground up is no mean feat. The sheer resources needed for such exploits could be considered, in a sense, a distinguishing feature in the ranks of society. It is a wonder why landlords stereotypically patrol their property clad in oversized khaki coats heavy with keys and locks, of course, the stack of dog eared papers boldly inscribed 'House to Let.'

The pressure to pay rent on the specified dates is intense! It's scarier when the Landlord call or texts tenants hilarious, reminding them to settle their dues.

What is Residential Rental Income?

'Pasaka Njema' This is not a happy easter wish from your caring, thoughtful landlord. This is a wake-up call to remind you that you should not spend all during Easter and need to pay your rent end month. Landlords and professional property managers prefer tenants who will pay rent on time though there is no definitive solitary metric that signals which will be a great tenant.  

Unfortunately, the landlords, too, have taxes to settle with the tax man and their expenses. Your lessor's subtle reminder that your rent is due lest you find an eviction notice glued on your door or, worse still, a mechanism designed to keep you out of the padlock! 

Residential property owners solely make an income from renting out their property appropriately designated rental income tax. Landlords with a rental income of KES 288,000 to KES. 15 Million a year are legally obligated to register and declare rental Income by filing and paying 10% on total rent received every month. Rental Income is also on a specified date.

What is the penalty for late filing and late payment of Residential Income?

For instance, rent received in January should be declared and tax due paid on or before 20th February. Your promptness in paying rent impacts how your landlord subsequently pays monthly rental income tax—a domino effect. Again, much like the eviction notice or the padlock at your door, failure to pay monthly rental income tax attracts a penalty. A classic case of what goes around comes around, huh?

A KES 2,000 or 5% tax is due for late filing and a late payment interest of 1% per month on the unpaid tax. Metaphorically, the Authority has a padlock of its own, too, which is figuratively bigger and only slapped on ingenious landlords who evade paying their tax dues.

Let’s go through a full example

You built/bought a flat in 2021 with 10 units and all the units of the flat are occupied, and each generates KES 20,000 per month, your monthly gross rental income is KES 200,000.

From this illustration Income tax from your total rental income per year is 2,400,000.

With applicable 10% rate of tax, your total tax for the year will be KES 240, 000. If you opt for Monthly submission the tax due will be KES 20,000.

How to file Residential Rental Income

To file Residential Rental Income, please note the following;

• Log in to iTax and complete a monthly tax return by declaring the gross rent, and tax payable will be computed automatically at 10%.
• File a NIL return for any month that the landlord does not receive any rent.
• Residential rental Income is a final tax. Therefore, persons are not required to declare the same in their annual income tax returns.

File on or before the 20th of the following month.

Have you tried the KRA M-service App? Download the Mservice App today. File and pay your monthly rental income tax using the  KRA M-service App.

Maureen Kasera - Digital Strategist