Unlike residential landlords, who pay a flat monthly fee, commercial property owners pay tax on a quarterly basis as installment tax – 4 times within the income year. They file their tax returns annually.
Residential landlords are legally allowed to deduct business expenses incurred in generating rental income. This effectively lowers their tax bill. Due to the expenses, the process requires downloading and filling out a detailed KRA Excel sheet or another provided expense format.
This process will be affected by the increased use of eTims as more taxpayers onboard.
Filing the annual commercial rental tax return via the KRA iTax portal can be as straightforward as you want it to be. You need to get the necessary knowledge and follow the simple steps.
The 7 Steps
We have provided this simple, step-by-step format to complete your income tax return as a Commercial Rental tax taxpayer. This is for all December cases involving taxpayers whose tax year runs from January 1st to December 31st. It also includes all other taxpayers.
Step 1: Gather eTIMS Invoices and Get Your Numbers
Before you upload your rental income information, you need to get your math correct. iTax systems are configured to check your claims against the available electronic records. Grab a pen, paper, and list the following:
a. Your Gross Rental Income – The total rent collected from all commercial tenants in that year of income. For example, for December cases, get the gross rental income collected between January 1st and December 31st.
b. Your Allowable Expenses – Gather your tax invoices and receipts for salaries (e.g., caretaker, security, etc.), structural repairs (renovations), National government land rent and County land rates, and any bank loan interest. Include all expenses incurred in generating the rental income.
c. Crucial Check – Ensure your expenses have tax invoices, for example, from eTIMS. iTax will automatically cross-reference these expenses during audits.
Step 2: Log into the iTax Portal
a. Open your browser and go to the KRA iTax Portal.
b. Enter your KRA PIN and password.
c. Solve the simple math security arithmetic question, and click Login. KRA has implemented this security arithmetic to confirm that you are human.
Step 3: Download the Correct Tax Return Form
a. On your dashboard, hover your mouse over the Returns tab on the top menu.
b. From the dropdown list, click on File Return.
c. Select your tax obligation. If you are filing as an individual, select Income Tax – Resident Individual. If registered as a business, select Income Tax – Company.
d. Click the link provided on the page to download the auto-populated Income Tax Return Excel zip file (or any other provided by KRA) to your computer.
Step 4: Fill Out the Rental Income and Expense Sheets
Unzip the downloaded folder and open the Excel sheet (or any other format provided). Ensure you click “Enable Content” or “Enable Macros” at the top of your Excel window (or any other format provided). This will enable you to calculate your totals.
a. Basic Info (Sheet A): Fill in your KRA PIN, type of return (Original not amended), and the return period (e.g., 01/01/2026 to 31/12/2026).
b. Declare Your Income and Deductions (Sheet B – Profit and Loss Account):
i. Navigate to the sheet labeled for Rental Income.
ii. Input your Gross Commercial Rent in the income section.
iii. Right below it, input your totals under the corresponding Expense Deductions fields (e.g., insurance, repairs, interest).
c. Calculate Tax (Tax Computation Sheet):
i. Go to the final calculation tab.
ii. Review the numbers. The form will automatically subtract your expenses from your gross rent and calculate your tax due on the net profit.
d. Click the Validate button at the bottom. If there are no errors, the Excel sheet (or any other format) will generate a zipped file, ready for you to upload and save automatically to your computer’s Documents folder.
Step 5: Upload the Zip File and Submit
a. Go back to your open browser tab on the KRA iTax Portal.
b. Under the File Return page, scroll down to the upload section.
c. Click Choose File and select the validated zip file from your Documents folder.
d. Check the box agreeing to the terms and conditions, then click Submit.
e. An Acknowledgment Receipt of the tax return with a downloadable PDF will appear on your screen instantly. A copy will be sent to your registered email address.
Step 6: Generate Your Payment Slip (E-Slip)
Filing your correct tax return on time lets the tax commissioner know what you owe, but you still need to pay it.
Step 7: Making Payments
Go to the Payments tab on your iTax dashboard and
a. Select Payment Registration.
b. Select the Tax Head as Income Tax and Tax Sub-Head as Income Tax – Resident Individual (or Company).
c. Choose the Payment Type as Self-Assessment Tax – you assessed yourself.
d. Select the tax period you just filed for (the year of income), and the system will automatically pull up the tax amount due.
e. Click Submit to generate an E-slip or PRN. You can now use the generated payment registration number to clear the balance safely via E-Citizen M-Pesa Paybill 222222 or at any KRA agent bank (listed on the PRN).
Note:
This post is for general guidance only. Note that these steps may vary depending on the following:
a. You have Withholding Tax Certificates from corporate tenants that you need to include as credits.
b. You are filing the tax return under your personal name and have other income.
c. You are filing this return under a registered limited company and may have other income.
d. You have any other sources of income (like employment or a side business) that need to be filled in the same Excel sheet (or other formats provided).
e. This order of steps may vary depending on changes by the tax commissioner.
Read other articles on rental income:
a. Rental income tax deductions – HERE
b. Individual rental income taxpayers – HERE
c. Commercial landlords and rental tax – HERE
e-Guide
Grab an e-Guide on rental income tax deductions – HERE
