The Kenyan government is proposing to tax rental income earned by non-resident landlords as part of the Finance Bill 2026.
This measure aims to ensure that foreign property owners contribute to the national treasury at rates similar to resident landlords. By capturing revenue from non-residents, the government seeks to create a more equitable tax environment while leveraging the growth of the domestic property market.
The proposal is one of 14 proposed income-tax changes included in the Finance Bill 2026 [2]. Government officials said the move is a step toward tax equity, ensuring that the burden of funding public services is shared more broadly across all property owners regardless of their residency status.
The push for these changes comes as the Kenyan real estate market continues to expand rapidly. According to the Kenya National Bureau of Statistics (KNBS) 2023/2024 Real Estate Survey, the sector recorded a growth rate of 33.7 percent [1].
This rapid expansion has increased the volume of rental income generated within the country. The Finance Ministry said it intends to use the new tax framework to capture a larger portion of these gains to fund government operations, a strategy designed to align tax collection with the actual economic activity occurring in the real estate sector.
The Finance Bill 2026 remains under consideration this month. If passed, the legislation will formally integrate non-resident rental income into the national tax bracket, closing a perceived loophole that previously allowed some foreign owners to avoid local tax obligations.
“The sector recorded a growth rate of 33.7 percent.”
This proposal signals a shift toward more aggressive revenue mobilization by the Kenyan government. By targeting non-resident landlords, Kenya is attempting to modernize its tax code to better reflect the globalized nature of real estate investment. If successful, this move could increase the state's fiscal space but may also influence the attractiveness of the Kenyan property market for foreign investors who previously benefited from a more lenient tax regime.
