How to File and Pay Monthly Rental Income on iTax

Kenya’s simplified tax regime for Monthly Rental Income (MRI) makes it easier for landlords to file taxes. Introduced by the Finance Act 2015 and enhanced in 2020 and 2024, this system applies to both individuals and companies earning between KES 280,000 and KES 15 million annually from residential rental properties.

Effective January 1, 2024, the MRI tax rate is 7.5% of gross rent—with no deductions for expenses or losses. This is considered a final tax, meaning once paid, the income is not subject to additional taxation in the annual return.

Let’s walk through how to file monthly rental income on iTax and pay it using the official PayBill 222222.

How to Register a Property on iTax

Before you can file MRI, you must register your rental property:

1. Visit iTax portal.
2. Click on “Registration” and select “Register Property Details.”
3. In Section A, confirm your auto-filled landlord details.
4. In Section B, choose one of:
   • New Property
   • Update Property
   • Deregister Property
5. Enter the tenant’s PIN, which will auto-fill their name.
6. Fill in required fields including monthly rental income.
7. Click “Add”, enter remarks, and click “Submit.”

You will get an Acknowledgement Receipt confirming the successful registration.

How to File Rental Income on iTax

After registering your property:

1. Go to “Returns” > “File Return” on the iTax portal.
2. Choose the obligation: Income Tax – Rental Income.
3. Under Section A, select Original Return or Amended Return.
4. Under Section B:
   • Your registered properties will auto-fill.
   • Enter monthly rent earned.
   • Tax due (7.5%) is automatically calculated.
   • Any withholding tax credits are factored in.
5. Click “Submit” to file the return.

How to Pay Monthly Rental Income Tax to KRA

Once your return is filed:

1. On iTax, navigate to “Payments” > “New Payment Registration.”
2. Set:
   • Tax Head: Income Tax
   • Sub-Head: Income Tax – Rent
   • Payment Type: Self-Assessment Tax
3. Enter the period (month/year) and click Add.
4. Select Payment Mode (mobile or bank) and click Submit.
5. Use the generated Payment Registration Number to pay via:
   • M-Pesa PayBill: 222222
   • Account Number: Use the PRN code generated

Key MRI Rules and Exemptions

• MRI applies only to residential rental income.
• Does not apply to:
  • Commercial rental properties
  • Non-resident landlords
  • Income above KES 15 million annually
• For income above KES 15M, landlords must file under annual Income Tax Return and declare all income sources.

MRI Filing Penalties

Late filing or payment attracts penalties:

• Individuals: KES 2,000 or 5% of tax due, whichever is higher.
• Companies: KES 20,000 or 5% of tax due, whichever is higher.
• Late payment penalty: 5% of tax due.
• Monthly interest: 1% on unpaid tax (compounded monthly).

When MRI is withheld (e.g., by an agent), it must be remitted within five working days, accompanied by a written return showing the amount withheld.

Conclusion

If you earn rental income from residential properties in Kenya, it’s essential to file monthly rental income on iTax and pay through the KRA PayBill 222222. With simplified rates, online filing, and no need for expense tracking, MRI provides a straightforward path to tax compliance for landlords.

Stay timely, stay compliant—and avoid penalties by completing your MRI filing and payment each month.