How to Determine the Amount of Rental Income Tax to be Paid

Knowing how much you are supposed to remit as rental income tax is easy. The first thing that you need to do is to prepare a rent schedule for all let property showing the number of property, rent received per property and gross rent received.

Having done that, you will then be required to complete a monthly tax return online via iTax by declaring the gross rent and tax payable will be computed automatically at 10%.

The example below shows how your tax will be calculated. It is easy and you can even do it yourself.

Let us say Mr. Landlord has two residential properties from which he is earning rents as follows:

• Property A with 5 units, at 20,000 shillings per month per unit
• Property B with 10 units at 15,000 shillings per month per unit

Now, assuming that;

• All units were occupied by tenants throughout the month of January 2016.
• Computation of taxable rent income and tax payable is as follows:

Let us also assume that the rent paid is for the month of January 2016.

• Property A –   5 units x Ksh. 20,000 100,000
• Property B – 10 units x Ksh. 15,000 150,000
• Total Rent income in Ksh.                                                250,000

The Computation of Mr. Landlord’s tax for the month of January and this also is on the assumption that he does not have any other incomes:

The total amount to be taxed for the month is 250,000 shillings. Ten percent of the total 250,000 shillings is 25,000 shillings. This implies that the amount that Mr. Landlord has to pay as tax is 25,000 shillings. Since this amount is for the month of January, then Mr. Landlord will be expected to pay his tax on the 20th of February.

Article by Juma Fred.