The Federal Government has approved a fresh package of tax reforms that allows tenants across Nigeria to claim up to 20 per cent of their annual rent as tax relief, capped at ₦500,000.
The provision is contained in the Nigeria Tax Act (NTA), one of four new laws signed into effect on September 10, 2025, following recommendations of the Presidential Fiscal Policy and Tax Reforms Committee chaired by Taiwo Oyedele. The reforms take effect from January 1, 2026.
Under the new law, tenants who pay documented rent can deduct 20 per cent of their annual rent from taxable income, provided the amount does not exceed ₦500,000. For instance, a tenant paying ₦1.5 million rent yearly can claim ₦300,000, while another paying ₦3 million can only claim the maximum ₦500,000.
The measure, according to officials, is designed to ease the financial burden on low and middle-income earners while preventing high-income groups from gaining disproportionate benefits. However, the relief does not extend to homeowners, those living rent-free, or individuals without verifiable tenancy agreements.
Beyond rent deductions, the NTA maintains exemptions for pension contributions and National Housing Fund (NHF) payments, while introducing wider reforms such as tax waivers for small businesses with annual turnover below ₦100 million and higher progressive tax rates of up to 25 per cent for wealthy Nigerians earning above ₦50 million.
The reforms also introduced VAT exemptions on residential property sales and rent, stamp duty relief on leases below ₦10 million, and lower withholding tax for local contractors in the real estate sector. Multinationals will now be subject to a 15 per cent minimum effective tax rate and levies on undistributed offshore profits.
Reacting to the development, Executive Director of the Housing Development Advocacy Network (HDAN), Festus Adebayo, described the new policy as a “huge relief” for rent payers. He commended government for shifting the tax burden to the wealthy while cushioning the impact on ordinary Nigerians.
According to him, “We told the committee this reform should bring real relief in the housing sector, and they didn’t disappoint. We even want abandoned properties owned by the rich to be taxed so they can be put to better use.”
The government insists the measures are aimed at protecting vulnerable groups while raising revenue more equitably from affluent individuals and corporations.
