Tax on commercial rent under normal income tax with expenses.
Tax due
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Net taxable rent
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After-tax income
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Your breakdown
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Why the flat 7.5 percent rental tax does not reach this rent
Most landlords in Kenya meet rental tax through the Monthly Rental Income (MRI) regime, a flat charge on gross residential rent with no deductions. That simple route closes the moment the let is commercial, or the moment residential rent climbs past a yearly ceiling. The cut-off this calculator works to is KES 15 million of annual rent, which is the upper bound of the MRI band as modelled here. Shops, offices, warehouses and godowns never qualify in the first place, regardless of size. Once you are outside MRI, the income falls back into ordinary income tax, and the upside is that you can finally subtract the costs of holding the property.
This is the gap the tool fills. It does not apply the 7.5 percent MRI figure at all. Instead it takes your gross rent, removes the expenses you key in, and taxes the remaining profit, either at the resident company rate or on the graduated individual scale, depending on who owns the building. The Kenya Revenue Authority sets out which lettings sit under MRI and which revert to normal tax, and because the thresholds and rates here have moved through recent Finance Acts, treat the figures as the basis this calculator uses and confirm the live position with the KRA before you file.
What counts as an allowable expense
The deduction box is where the real planning happens, and it is also where landlords most often leave money on the table. Genuinely allowable costs of earning the rent usually include repairs and maintenance, agent and letting fees, rates and ground rent, insurance on the building, and loan interest on money borrowed to buy or improve the property. Capital improvements that add a new asset are treated differently from running repairs, so a fresh extension is not the same as repainting after a tenant leaves. A frequent mistake is claiming the full mortgage instalment when only the interest portion is deductible, not the capital repayment. Keep invoices, because the KRA can ask you to substantiate every shilling.
A 6 million shilling office block, owned through a company
Take the figures the calculator opens with. A company collects KES 6 million in gross commercial rent over the year and incurs KES 1.5 million of allowable expenses. Net taxable rent is therefore KES 4.5 million. Run through the resident company rate this calculator applies, currently 30 percent though you should confirm it with the KRA, the tax works out as below.
The chart shows where the KES 6 million ends up: expenses recovered, tax to the KRA, and profit kept after tax.
Switch the entity selector to Individual and the same KES 4.5 million net rent runs through the graduated personal scale instead, which folds in the personal relief and assumes the rent is that person's only income. On those inputs the individual charge is lower than the flat company rate, around KES 1.26 million, so ownership structure genuinely changes the bill. A practical tip: high-rent commercial property held personally can push you into the top personal band quickly, so model both before you decide how to title the asset.
Can I deduct the cost of building or buying the property?
Not directly as an expense in one year. The purchase price or construction cost is capital, so it is relieved through capital allowances over time, not subtracted in full against a single year's rent. Loan interest on the borrowing is deductible against rent, but the principal is not. This calculator works on the net rent figure you supply, so calculate your allowable depreciation and interest separately and include only the deductible amounts in the expenses box.
Does my tenant withhold tax on commercial rent?
Often, yes. Where rent for immovable property is paid through an appointed agent, a withholding tax is deducted at source and remitted to the KRA, then credited against your final liability. That withholding is an advance payment, not an extra tax, so the figure this tool shows is your overall charge before any such credit. Reconcile the withholding certificates against this number when you file, and confirm the current agency-withholding rate with the KRA.