Property Tax Reports: How to Prepare and File

A complete guide to preparing and filing property tax reports for rental income in Kenya.

In Simple Terms

Property tax reports are documents you file with KRA showing your rental income and allowable expenses. They're part of your annual tax return (ITR) and must be filed by June 30th. Proper preparation ensures you claim all deductions and avoid penalties.

Overview

Property tax reports are a crucial part of your annual tax filing. They detail:

  • Your rental income for the tax year
  • All allowable expenses you've incurred
  • Your net rental income (income minus expenses)
  • Tax payable on rental income

What Are Property Tax Reports?

Property tax reports are part of your Individual Tax Return (ITR) that specifically cover rental income. They include:

Components of Property Tax Reports

  • Rental Income Schedule: Details of all rental income received
  • Expense Schedule: Breakdown of all allowable expenses
  • Net Rental Income: Calculated as income minus expenses
  • Tax Calculation: Tax payable on net rental income
  • Supporting Documentation: Receipts, invoices, and other evidence

When to File Property Tax Reports

Property tax reports are filed as part of your annual tax return:

Filing Deadline

June 30th of the year following the tax year

Example: For rental income earned in 2024, file by June 30, 2025

Penalties for Late Filing:

  • KES 2,000 or 5% of tax due (whichever is higher)
  • Interest at 1% per month on outstanding tax
  • Additional penalties for continued non-compliance

Preparing Your Property Tax Report

Before filing, gather and organize all necessary information:

Step 1: Gather Income Information

  • Total rent received during the tax year
  • Rental agreements/leases
  • Bank statements showing rent deposits
  • Records of any rent-free periods
  • Details of any deposits retained

Step 2: Compile Expenses

  • All receipts and invoices for expenses
  • Property management fees
  • Repairs and maintenance costs
  • Insurance premiums
  • Rates and levies
  • Mortgage interest statements
  • Other allowable expenses

Step 3: Calculate Net Rental Income

Use this formula:

Net Rental Income = Gross Rental Income - Allowable Expenses

Step 4: Calculate Tax

Apply the appropriate tax rate to your net rental income:

  • First KES 288,000: 10%
  • Next KES 100,000: 25%
  • Above KES 388,000: 30%

Filing Process

File your property tax report through the iTax portal:

Step-by-Step Filing

  1. Log into your iTax account at itax.kra.go.ke
  2. Navigate to "Returns" → "Individual Tax Return (ITR)"
  3. Select the appropriate tax year
  4. Complete the rental income section:
    • Enter gross rental income
    • Enter all allowable expenses
    • Review the calculated net rental income
  5. Attach supporting documents (receipts, invoices)
  6. Review all information carefully
  7. Submit the return
  8. Save or print the acknowledgment receipt

Tips for Smooth Filing

  • File early to avoid last-minute rush
  • Double-check all calculations
  • Ensure all documents are properly scanned
  • Keep a copy of your submitted return
  • Save the acknowledgment receipt

Common Mistakes to Avoid

❌ Claiming Non-Deductible Expenses

Don't claim capital improvements, personal expenses, or principal repayments. Only claim expenses that are wholly and exclusively for earning rental income.

❌ Missing Allowable Expenses

Many landlords forget to claim all allowable expenses. Review the list carefully and ensure you claim everything you're entitled to.

❌ Incorrect Income Reporting

Report all rental income, including rent received in cash. Don't forget to include any additional payments from tenants.

❌ Poor Documentation

Without proper receipts and documentation, you may not be able to claim expenses during an audit. Keep all records organized.

❌ Missing the Deadline

Late filing results in penalties and interest. Set reminders and file well before the June 30th deadline.

Tips for Success

Best Practices

  • Keep records throughout the year: Don't wait until filing time
  • Use a separate bank account: Makes tracking rental income and expenses easier
  • Organize receipts monthly: File receipts as you receive them
  • Use accounting software: Consider using simple accounting tools
  • Review annually: Do a mid-year review to catch any issues early
  • Seek professional help: For complex situations, consult a tax professional
  • Stay updated: Tax laws change, stay informed

Worked Example: Complete Report

Tax Year: 2024

Gross Rental Income:

KES 240,000

Allowable Expenses:

  • Management fees: KES 24,000
  • Repairs: KES 30,000
  • Insurance: KES 12,000
  • Rates: KES 18,000
  • Mortgage interest: KES 60,000
  • Other: KES 6,000
  • Total: KES 150,000

Net Rental Income:

KES 240,000 - KES 150,000 = KES 90,000

Tax Payable (30%):

KES 90,000 × 30% = KES 27,000