If you are a landlord, then one of your monthly obligations is paying the Monthly Rental Income (MRI) tax. This is simply a 7.5% cut from your gross residential rent and it applies to individuals and corporate tenants earning yearly rents of about KES 288,000 – KES 15,000,000. For clarity, if you rental units combined bring in a gross of KES 24,000 – KES 1,250,000 monthly, then you are eligible for MRI tax.
Gross rent means that no expenses or deductions have been subtracted from the rent you receive. By law, MRI tax must be filed and paid on or before the 20th day of the month after collecting rent. So if you receive rent on April, you should have paid your MRI tax by 20th of May. In this guide, I will be showing you how to register, calculate and file your MRI tax. Let us get started.
How to calculate MRI Tax
If you own Property A with 15 units of 1-bedrooms and you charge KES 10,000 a month. Your total gross rent will be;
KES 10,000 X 15 = 150,000
Since MRI tax is 7.5% of gross rent;
= 7.5% X 150,000
= 11,250
Assuming you collected the rent on 30th April, you should have filed and remitted it by the 20th of May. If you have 2 properties, then you will simply add their total rental incomes and calculate your tax from the total; For example;
Property A brings = KES 200,000 each month
Property B brings = KES 300,000 each month
Total monthly rents = 200,000 + 300,000
= 500,000
Since MRI tax is 7.5% of the gross rent;
= 7.5% X 500,000
= 37,500
At the time of publishing this guide, there are ongoing proposals to increase the MRI tax to 10% in the new finance bill 2026. If it goes through, the new rate will replace the 7.5% and you will need to adjust this in your calculation.
Generating a Payment Registration Number
To pay your Monthly Rental Income (MRI) tax in Kenya, you first file your return via the KRA Portal to generate a Payment Registration Number (PRN). The PRN is a unique electronic reference code on the top right corner of your KRA payment slip. It acts as the account number you use when settling your tax through M-Pesa or at authorized banks.
You then proceed to pay the tax due by the 20th of each month using the KRA M-Pesa PayBill, KRA banks, or the KRA M-Service App. The steps of generating a PRN are outlined as below;
- Log in to the KRA Portal and select Payments –> New Payment Registration.
- Select Tax Head: Income Tax | Sub-Head: Income tax – Rent.
- Select Payment Type: Self-Assessment Tax and enter the tax period (year and month).
- Submit to generate and download your PRN (E-slip).
It is important to note that the PRN is generated on every single transaction that you make and this means for every MRI tax you file and remit, you will always need a new PRN code.
Methods of paying MRI Tax
Upon generating your PRN, the next step is to select a mode of payment that you are comfortable with. There are 3 options you could choose from; M-Pesa, paying via the bank or KRA Service App. Personally, M-Pesa is the quickest and most convenient for most people. However, if you manage several properties on behalf of someone else, paying through the bank where you receive the rent from is the best way to ensure you stay transparent and organized.
1. Paying via M-Pesa
- Go to your Safaricom M-Pesa menu and select Lipa na M-Pesa.
- Enter the KRA PayBill number: 222222.
- Enter the generated PRN/E-slip number as the account number.
- Enter the exact tax amount indicated on your PRN.
- Confirm the details and enter your M-Pesa PIN.
2. Paying at the bank
- Print your generated PRN (E-slip).
- Visit any of the KRA-appointed commercial banks (e.g., KCB, Equity, Co-operative Bank).
- Present your slip and cash to the teller to make the payment.
3. Pay via KRA M-Service app
- Download the KRA M-Service App via the Google Play Store or App Store.
- Log in and navigate to the payment section.
- Enter your PRN and pay directly through your mobile device
People Exempted from MRI Tax
There are 3-groups of persons who are exempted from paying Monthly Rental Income Tax. If you belong to either of them, your rental tax is submitted together with income tax at a rate of up to 30%.
- Rental income from commercial property – if you own commercial property, you are required to pay an income tax on it and not MRI tax. The rate depends on how much you bring in from the property but is capped at 30%. The good thing is that you are allowed to deduct allowable expenses like repairs, agent commissions and loan interests.
- Non-resident landlords – all non-resident landlords are subject to a 30% withholding tax on the gross rental income.
- Landlords earning residential rents exceeding KES 15,000,000 a year – if the total income from your rental properties is above 15 million or KES 1.25 million a month, you don’t pay MRI. What you are required to pay is income tax together with your other sources of income.
