On 29th April 2026, the Kenya Revenue Authority published the Draft Income Tax (Residential Rental Income Tax) Regulations, 2026. These regulations, issued under the authority of CS John Mbadi Ng'ongo, are meant to replace the older 2016 framework with a tighter, digitally enforced system.

If you own a residential rental property in Kenya and earn between KES 288,000 and KES 15 million per year in rent, this affects you directly.

The tax itself has not changed

Section 6A of the Income Tax Act still requires landlords earning residential rental income within that band to pay 7.5% of gross rent as tax. That rate remains the same. What has changed is how KRA plans to enforce collection.

Mandatory registration on eRITS

Clause 7 of the draft regulations states that any person earning income subject to residential rental tax must register the property on an electronic system prescribed by the Commissioner. That system is the Electronic Rental Income Tax System (eRITS), which KRA launched in September 2025.

Until now, signing up for eRITS has been voluntary. Most landlords have been declaring rental income through iTax using self-assessment. KRA wants to end that arrangement.

The numbers tell you why. Six months after eRITS went live, only 1,412 landlords had registered. They listed 2,628 buildings containing 26,668 rental units. Only 529 returns were filed through the platform, generating KES 1.68 million in tax revenue.

For context, President Ruto projected eRITS would push rental tax collections from KES 14 billion annually to KES 80 billion. At KES 1.68 million collected in half a year, the system is nowhere close. KRA's own Medium-term Revenue Strategy acknowledged that residential rental income tax collection performance stood at just 18% before eRITS was introduced.

Voluntary compliance has not worked. Making registration compulsory is the next move.

Monthly filing by the 20th

Under the draft rules, landlords must submit a return and pay the tax owed by the 20th of the month following the month rent was received. Collect March rent, file and pay by 20th April.

Monthly filing is not new. The current law already requires it. But the draft ties this obligation to the electronic system, which gives KRA real-time visibility into who is filing, who is late, and who is missing entirely.

No deductions. At all.

Clause 11 is short and direct: no expenses or capital deductions shall be allowed when computing the tax.

You cannot subtract maintenance costs, property management fees, agent commissions, insurance, or mortgage interest from your gross rent before applying the 7.5% rate. The tax hits the full amount received.

This has been the position since the residential rental income tax was introduced, but it still catches landlords off guard. If you collect KES 50,000 in monthly rent, you owe KES 3,750 in tax regardless of what you spent on repairs, security, or water bills that month.

Partnerships are covered too

The regulations apply to partnerships that own residential rental property, not just individuals. If you co-own a rental block with a business partner and the income falls within the qualifying band, these rules apply to both of you.

Opting out is possible

If you would rather be taxed under the standard income tax framework instead of the flat 7.5%, you can opt out. But there are conditions. You must notify the Commissioner at least three months before the end of your year of income. The change only kicks in the following year.

And if your rental income crosses KES 15 million during the year, or you believe it will, you must inform KRA before year-end. Failure to do so is a criminal offence under the Act.

KRA gets real inspection powers

Clause 10 gives the Commissioner authority to require any person to produce books and records related to rental income, appear in person at a specified time and place, or update property details on the electronic system.

For landlords who have been collecting rent in cash, keeping no written records, and filing nil or reduced returns, this is where the risk sits. KRA is not just asking landlords to register. It is building the legal basis to audit them.

Records must be kept

Clause 6 requires landlords to keep records in line with Section 23 of the Tax Procedures Act. This means maintaining proper documentation of all rental income received, for a minimum of five years.

Penalties for non-compliance

The draft regulations do not create new penalties. Instead, Clause 9 refers back to the Tax Procedures Act, which already prescribes penalties for late filing, late payment, and failure to keep records. These include a 5% penalty on the unpaid tax plus 1% monthly interest until the balance is cleared.

What this means for you

If you own a rental property and your annual rent falls between KES 288,000 and KES 15 million, start preparing now. Get your records in order. Understand your filing obligations. If you are not already registered on eRITS, expect that to become mandatory once these regulations are finalised.

KRA is accepting public comments on the draft until 25th May 2026. You can send your views to stakeholder.engagement@kra.go.ke or by post to the Commissioner General, Kenya Revenue Authority, P.O. Box 48240-00100, Nairobi.

The full draft text is available on the KRA website.

These are draft regulations and are subject to change following public consultation. This article reflects the position as published by KRA on 29th April 2026.