If you are in the Kenyan diaspora and you own a house, apartment, or commercial property back home that you rent out, the Finance Bill 2026 creates a specific new tax obligation that applies directly to you. It also applies to any foreigner living outside Kenya who owns and rents out property here.
This is not a tweak to an existing rule. It is an entirely new section — Section 6B — inserted into the Income Tax Act, creating a formal, named tax called the non-resident rental income tax. It comes with its own registration requirement, its own monthly filing cycle, and its own rate. It takes effect 1st July 2026.
Who exactly does this apply to?
The Finance Bill 2026 defines the trigger as follows: any income that is accrued in or derived from the use or occupation of property situated in Kenya by a non-resident person.
A non-resident person, under Kenyan tax law, is someone who does not meet the residency test — broadly, a person who is not physically present in Kenya for 183 days or more in a tax year, and who does not have a permanent home in Kenya. For the diaspora, this means if you live and work in the UK, US, Canada, Germany, Australia, or any other country, and you own property in Kenya that generates rental income, you are a non-resident for these purposes.
The property covered is immovable property — land, houses, apartments, commercial buildings. If a tenant pays you rent for occupying your Nairobi apartment while you live in London, that rental income is caught by Section 6B from 1st July 2026.
What is the tax rate?
The non-resident rental income tax is charged at the rate specified in the Third Schedule to the Income Tax Act. Under the existing Third Schedule, the non-resident withholding tax rate for rent or similar consideration for the use or occupation of immovable property is 30% of the gross amount payable.
This is a final tax. It does not sit alongside other income tax obligations — once paid, it settles your Kenyan tax liability on that rental income. You do not need to include it in a further income tax computation.
To put this in perspective: a resident Kenyan landlord pays 7.5% of gross rental receipts under the Monthly Rental Income (MRI) scheme introduced under Section 6A. A non-resident landlord pays 30% of the gross rental amount. The difference is substantial and reflects the government's longstanding policy of taxing non-residents more heavily on Kenya-sourced income, given they benefit from Kenyan property markets without contributing to the economy in the same way as residents.
What you must do: the three obligations
Section 6B imposes three clear obligations on every non-resident person subject to this tax.
First: Register. You must register and account for the tax through a simplified registration framework that will be prescribed by the KRA Commissioner. The bill signals that KRA will create a specific, streamlined process for non-resident landlords — you will not be expected to go through the full standard taxpayer registration process that a Kenyan resident follows.
Second: File monthly. You must submit a return for each month in which rent is received or paid.
Third: Pay by the 20th. The tax due must be paid on or before the twentieth day of the month following the end of the month for which the rent is paid. If your tenant pays rent in July 2026, your return and tax payment for that rent must reach KRA by 20th August 2026.
This is a monthly obligation, not an annual one. Unlike the annual income tax return that most Kenyans deal with, Section 6B runs on a rolling monthly cycle tied directly to when rent is received.
The exception: when a Kenyan agent or caretaker is already withholding
There is one important situation where the direct filing obligation under Section 6B does not apply to you as the non-resident landlord: where a resident person collects the rent on your behalf and is already subject to the withholding tax deduction specified in Section 35(3)(j) of the Income Tax Act.
In plain terms: if you have a Kenyan property agent, caretaker company, or property manager who collects your rent and is legally required to withhold and remit tax on that rental income before sending you the balance, you are not required to separately file under Section 6B. The withholding mechanism at source covers your obligation.
This is a practical relief for many diaspora landlords who already work through formal property management companies. However, if your arrangement is informal — a relative collecting rent and sending it to you via M-Pesa, a caretaker who passes rent directly without any tax deduction — the exception does not apply. The obligation to file and pay falls back on you.
What was the position before 2026?
Before the Finance Bill 2026, there was no specific mechanism for taxing non-resident rental income. Technically, non-residents earning rental income from Kenyan property were supposed to declare it and pay income tax at the applicable non-resident rates — but there was no dedicated registration system, no defined filing cycle, and no named tax for this category of income.
The Finance Bill 2025 did not introduce this provision. Section 6B is entirely new in 2026.
The practical reality was that most diaspora landlords either did not declare this income to KRA at all, or were uncertain about whether and how they were supposed to do so. The Finance Bill 2026 removes that uncertainty by creating a specific, formal obligation — and by implication, creating the enforcement infrastructure to match it.
Practical steps for diaspora landlords
If you rent out property informally through a family member or caretaker:
You are squarely in Section 6B's target. From 1st July 2026, you need to register with KRA under the simplified framework, file a return each month rent is received, and pay 30% of that rent to KRA by the 20th of the following month. KRA has not yet published the details of the simplified registration framework — watch the KRA website and iTax portal for guidance before July.
If you use a formal property management company:
Ask your property manager directly whether they are registered as a withholding tax agent and whether they are already deducting and remitting withholding tax on your rental income under Section 35(3)(j). If they are, you are covered. Get written confirmation of this. If they are not, you either need to switch to a manager who handles this properly, or you need to file yourself under Section 6B.
If your property is managed by a tenant directly paying you:
Whether they pay to your Kenyan bank account, your foreign account, or through mobile money — the obligation is yours. The payment channel does not affect your tax liability. KRA's interest is in the income, not how it travels.
If you have multiple properties:
Each rental income stream is caught separately. The 30% rate applies to the gross rent from each property, and you would include all properties in your monthly return.
The numbers: what this looks like in practice
Say Amina lives in Toronto and rents out her two-bedroom apartment in Kilimani, Nairobi, for Ksh 55,000 per month. Her tenant pays directly to her Kenyan bank account.
Under Section 6B from July 2026:
- Monthly rent received: Ksh 55,000
- Non-resident rental income tax at 30%: Ksh 16,500
- Amount Amina retains after tax: Ksh 38,500
- Filing deadline: 20th of the following month
- Tax is a final tax — Amina has no further Kenyan income tax obligation on this rent
If Amina had been a Kenyan resident landlord instead, she would pay 7.5% of Ksh 55,000 — a tax of Ksh 4,125. The difference between resident and non-resident treatment on the same property is Ksh 12,375 per month, or Ksh 148,500 per year.
What about properties that aren't rented — just sitting empty or used when you visit?
Section 6B only applies to income derived from the use or occupation of property. If your Kenyan property is vacant, under renovation, or occupied only by yourself during visits, there is no rental income and no Section 6B obligation. The tax is triggered by the act of earning rental income, not by owning property.
Summary
| Resident landlord | Non-resident landlord |
Applicable section | Section 6A | Section 6B (new from 1 July 2026) |
Tax rate | 7.5% of gross rent | 30% of gross rent |
Filing cycle | Monthly | Monthly |
Payment deadline | 20th of following month | 20th of following month |
Final tax? | Yes | Yes |
Registration needed? | Yes (iTax MRI) | Yes (simplified framework — details pending) |
Continue reading the Finance Bill 2026 series:
- Part 1: The Big Picture - What Is the Finance Bill 2026?
- Part 2: Income Tax - What Changes in Your Pay and Pocket
- Part 3: What's Getting Cheaper - VAT and Import Fee Changes
- Part 4: Crypto and Digital Money - KRA Is Watching
- Part 5: Sin Taxes - Alcohol, Tobacco, and Excise Changes
- Part 7: Filing and Compliance - New KRA Deadlines
