The federal government through the Nigeria Tax Act (NTA) has brought about sweeping reforms in the property sector as tenants can now redeem 20 per cent of their rent as rent relief of up to N500,000

On August 8, 2023, President Bola Tinubu inaugurated the Presidential Fiscal Policy and Tax Reforms Committee led by Taiwo Oyedele to drive reforms in Nigeria?s tax system

Two years down the line, the Committee has come up with new Tax policies for the country which was passed by the National Assembly, signed by the president and later gazetted on 10th September 2025.

The four new tax laws aimed at overhauling its tax system and boosting revenue from January 1, 2026.

They are Nigeria Tax Act, Tax Administration Act, Nigeria Revenue Service Act, and Joint Revenue Board Act replace over a dozen outdated statutes.

Highlight of the Act include exemption of individuals earning up to N800,000 annually from personal income tax and maintain VAT exemptions on food and education.

However, High income Nigerians will face new progressive rates up to 25 per cent on incomes above N50 million, with global income, capital gains on assets including crypto, and non-cash benefits now taxable.

Also, small businesses with turnover below N100 million will pay no corporate tax or capital gains tax but must register with the Corporate Affairs Commission and use e-invoicing. Larger firms will keep paying 30 per cent corporate tax, with a possible cut to 25 per cent for key sectors.

Multinationals face a 15 per cent minimum effective tax rate and new levies on undistributed offshore profits.

The federal government says the changes protect the poor while shifting the tax burden to wealthy individuals and big corporations.

Consequently, Section 30 sub section 26 of the Nigeria Tax Act has now provided succor for rent payers as they can now access 20 per cent of their rent provided that the 20 per cent is not above N500,000

Also, the rent relief of 20% of their annual rent can only be redeemed if the actual rent paid is declared accurately.

However, this benefit is exclusive to tenants as homeowners are not eligible for any form of housing-related tax relief under the new rule.

Daily Trust understands that the new tax administration system is designed to be more favourable to low and middle-income earners.

How it works

The Law allows tenants to deduct 20% of their annual rent from their taxable income, but with a maximum deduction of N500,000.

This means you can get relief on 20% of your annual rent, up to a cap of N500,000 or lower.

For instance, if your annual rent is N1,500,000, you can deduct N300,000 (20% of N1,500,000), because it?s less than the N500,000 cap. However, if your rent is N3,000,000 annually, you can only claim N500,000, as that is the maximum allowed, despite the 20% calculation being N600,000.

This cap ensures that high-income earners do not benefit disproportionately from the new rent-based deduction.

Who is qualified for rent relief?

The Act provides that the rent relief is exclusively for tenants who pay documented rent. Therefore, homeowners, individuals in rent-free accommodation, and those without verifiable rental agreements do not qualify.

The government replaced older relief mechanisms with this rent-based deduction to target housing expenses for individuals with recurring rental costs.

However, despite the rent relief, other deductions remain valid. These include Pension contributions under the Pension Reform Act, National Housing Fund (NHF) among others

What the Law says

Section 30 sub Section IV of the NTA states that ?20% of annual rent paid, subject to a maximum of N500,000 whichever is lower, provided that the individual accurately declares the actual amount of rent paid and other relevant information as may be prescribed by the relevant tax authority ; and (b) ?total income? means total income as specified in section 28 of this Act. 31. Deduction shall not be allowed under this Part to any person for a year of assessment, unless claimed in writing in such form as the relevant tax authority may prescribe

?The relevant tax authority may require a claimant to a deduction under section 30 (2) (a) of this Act to produce such documentary evidence as may be necessary in support of any claim and in the absence of such evidence, or where such evidence is inadequate, the relevant tax authority may refuse to allow the deduction or such part of the amount claimed,?

Other highlights of the law for real estate players

Other highlights of the Law says Homebuyers and renters benefit from this law through value added tax (VAT) exemption on land and property sales, including interest in land and rent of residential properties. This has the potential of lowering construction cost and, by extension, house prices.

The Law further highlights that stamp duty exemption on lower-rent leases of less than NGN 10 million monthly while for developers and construction firms, the good news is also in the lower costs on input materials due to VAT exemption on real estate.

Also, it highlights cost reliefs by lower with-holding-tax (WHT) rates from 2.5 percent based on rental value to 2.0 percent for local contractors, while foreign contractors pay 5 percent.

In the new tax regime, investors are to enjoy WHT exemption on dividend distributions from REITs which improves returns and attracts investor capital.

Meanwhile, reacting to the development, the Executive Director at the Housing Development Advocacy Network, Barr. Festus Adebayo, welcomed the development saying it is a relief for rent payers

?It is a huge relief for rent payers because we had engaged with the tax committee and told them that we want the Law to be a relief to us in the housing sector and they didn?t disappoint

?We like the fact that they are taxing the rich and giving some relief to the poor because there is no harm in taxing the rich

?In fact we want the Law to even extend to taxing those completed and abandoned buildings owned by the rich because if you know they will tax your property that is completed but not in use, you will find a way to be judicious,? he said. (Daily Trust)

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