Shortlet Tax in the 2025 Act: What a Long Let Never Pays

A long let is a supply of land. A shortlet is a supply of services. Under the Nigeria Tax Act 2025, that one distinction changes which taxes you pay, how often you file, and what you can claim.

Take a flat in Lekki.

Let it for a year at ₦12,000,000 and you have rent. You charge no VAT on it, because the Nigeria Tax Act 2025 exempts land and buildings.

Let it by the night at ₦120,000 for 200 nights and you gross ₦24,000,000. You also pay the platform, the cleaners, the power and the co-host, and Lagos charges a 5% consumption tax. After all that and income tax, the shortlet nets ₦46,400 more. Add the 5% to the nightly rate, where it belongs, and it nets ₦1,246,400 more.

The extra turnover also moves you toward two limits. Past ₦100,000,000 a year you lose the VAT exemption for small businesses, and this guide treats your bookings as taxable. Through a company, past ₦50,000,000 you lose the 0% rate.

Most comparisons between short-term rental and long-term rental stop at gross yield. That is the least interesting number. This guide covers what each model costs after tax, where the 2025 law is clear, and where it is unsettled.

Key takeaways

A long let is exempt from VAT. This guide treats a shortlet as a service, taxable once you're outside the small business exemption.
A small business has turnover of ₦100,000,000 or less and fixed assets under ₦250,000,000. It doesn't register for VAT, charge it or file VAT returns.
Lagos charges 5% consumption tax on shortlets. Add it to the nightly rate.
A small company pays 0% company income tax: turnover of ₦50,000,000 or less, fixed assets of no more than ₦250,000,000, and no professional services.
Deduct what the listing costs to run, and claim capital allowances on the furnish-out at 20% a year.

VAT: exempt on a long let, taxable on a shortlet

Section 186(1)(l) of the Nigeria Tax Act 2025 lists, among exempt supplies:

land or building including interest in land or building

A long let is a grant of an interest in land. Your tenant gets exclusive possession of the property for a term. That is inside the exemption. No VAT on residential rent, and none on commercial rent either. The Act draws no distinction between the two.

A shortlet is harder to place. Your guest never gets an interest in land. They get a licence to occupy for two nights, and what they pay for is bundled: a furnished flat, power that works, linen changed between stays, cleaning, WiFi, security, sometimes an airport pickup. That is the supply of services, priced per night, delivered by a business.

The Act doesn't say so in terms. Section 186 has no carve-out for hotels, serviced apartments or shortlets. But the exemption covers land and buildings, and your guest pays for a serviced night. Treating that as exempt because it sits in a residential building is a position you would have to defend.

The working position in this guide: treat shortlet accommodation as taxable once you are outside the small business exemption below. Put it to your accountant on your specific facts. If they reach a different view, follow theirs. Just don't leave the question unasked.

Bookings through Airbnb are the exception. Airbnb collects 7.5% VAT on the listing price, including cleaning fees, for stays in Nigeria, and pays it over itself. You have nothing to collect or remit on those bookings, whether or not you are registered. Everything below applies to the bookings you take directly, and to any platform that does not collect it for you.

Before that bites, check whether you are inside the net at all. The Tax Administration Act defines a small business as one with gross turnover of ₦100,000,000 or less and fixed assets less than ₦250,000,000, professional services excluded. Section 22 of that Act exempts a small business from the VAT regime. The exemption is wider than most summaries admit. Section 22(5) describes what a small business may opt out of:

the exemption granted to small businesses under this Part including registration, charging of tax on its taxable supplies and filing of returns

So a small business is not merely relieved of monthly filing. It is outside registration and outside charging VAT altogether, unless it elects in. Electing in is a real option, for the input VAT reason below.

Neither 2025 Act sets a ₦25,000,000 VAT threshold. Treat it as stale.

VAT is a tax on your guest that you collect. If you should have charged VAT and didn't, the penalty is 40% of the VAT you failed to collect (Tax Administration Act, s.105). You can't go back and bill a guest who checked out in March, so it comes out of your margin.

Once you're registered, you can deduct the VAT you pay on what runs the listing, such as furniture, appliances, the generator and the cleaning contract (s.156(5)).

If a supplier should have charged you VAT and didn't, you can't deduct that expense (s.21(p)). If a company owns the listing, an asset bought that way doesn't qualify for capital allowances either (s.27(2)). On a furnish-out, that is expensive.

Lagos consumption tax: the 5% that names you explicitly

The Lagos State Hotel Occupancy and Restaurant Consumption Law imposes 5% on accommodation, and it does not leave shortlets to inference. Short-let apartments are named alongside hotels, guest houses and motels. Collection runs monthly, remitted to the Lagos Internal Revenue Service by the 20th.

Then it gets complicated. Whether Lagos can charge this alongside federal VAT has been in the courts for six years, and in AG Lagos v Eko Hotels the Supreme Court held that the VAT Act covers the field: charging both on the same supply is double taxation. The wider state-versus-federal question is still before the Supreme Court as at September 2026, and enforcement has not waited for it.

So you are exposed to a 5% state tax that names your business, a 7.5% federal tax with the stronger constitutional pedigree, and authority saying you should not pay both. Other states run comparable levies under their own laws, so check your state's position rather than assume the Lagos regime travels.

This is not an area to resolve from a blog post. It is an area to price into your nightly rate and raise with an advisor before an assessment arrives.

Deduct what the listing costs to run

A shortlet costs more to run, and you pay most of the costs yourself. Each is deductible if you incurred it wholly and exclusively to earn the income (s.20):

Platform commission
Turnover cleaning and linen, per stay
Power: diesel, inverter, Band A tariff
Internet and television subscriptions
Guest consumables and welcome supplies
Co-host or operations staff
Dynamic pricing tools, listing photography
Repairs, maintenance, service charge, security

On a long let, the tenant pays most of these, so there is less to deduct.

Void nights carry cost. Occupied nights carry revenue. Power, internet and security cost the same whether the listing is booked or empty.

Claim allowances on the furnish-out

Table I of the First Schedule sets the rates:

Class	Rate	Covers
1	10%	Building expenditure
2	20%	Plant, furniture and fittings, other equipment
3	25%	Motor vehicles, software

This is where a shortlet wins. A long let is handed over bare or lightly fitted. A shortlet is furnished to hotel standard: generator, inverter, air conditioning, appliances, beds, linen, the lot. A ₦12,000,000 furnish-out written down at 20% is ₦2,400,000 of allowances a year that a bare long let does not generate.

If you also live in the flat, the allowance is cut to the shortlet's share (First Schedule, paragraph 16). Shortlet it for eight months and live in it for four, and you claim the eight months. The VAT condition above applies too.

Through a company: the ₦50 million line

Section 56 sets two rates. A small company pays 0%. Any other company pays 30%.

The definition is exact, and both limbs must hold:

"small company" means a company that earns gross turnover of N50,000,000 or less per annum with total fixed assets not exceeding N250,000,000, provided that any business providing professional services shall not be classified as a small company

The ₦100,000,000 figure belongs to the other Act. The Tax Administration Act uses it for the small business VAT exemption. For company income tax, the number is ₦50,000,000. Trust the ₦100M figure at ₦80,000,000 of turnover and you will think you owe nothing. You owe 30% plus the 4% development levy under section 59.

Through a company, a shortlet reaches ₦50,000,000 twice as fast. The flat that lets for ₦12,000,000 a year grosses ₦24,000,000 on 200 nights at ₦120,000. Three listings put the company at ₦72,000,000, past the limit. Three long lets put it at ₦36,000,000. If the company owns the building, ask your accountant whether its value counts toward that limit. Taking money out of a company is taxed too.

Capital allowances can reduce taxable profit to zero while the development levy still bites, because section 59 imposes it on assessable profits, the figure before capital allowances are deducted.

Side by side

	Long-term let	Shortlet
VAT on the let	Exempt (s.186(1)(l))	Taxable as services, once outside the small business exemption. Airbnb collects it on Airbnb bookings.
State consumption tax	No	5% in Lagos, named explicitly
Deductible operating costs	Narrow: the tenant pays most	Wide: you pay most
Capital allowance base	Minimal	Substantial furnish-out at 20%
Speed to the ₦50M ceiling	Slow	Roughly 2× faster per property
Filing cadence	Annual	Annual, plus monthly VAT returns outside the exemption

One flat, let both ways

One flat, owned outright. Two models. Individual, no other income.

	Long let	Shortlet
Revenue	₦12,000,000	₦24,000,000
Deductible costs	₦2,730,000	₦13,210,000
Taxable income	₦9,270,000	₦10,790,000
Income tax	₦1,458,600	₦1,732,200
Lagos consumption tax (5%)	—	₦1,200,000
Net	₦7,811,400	₦7,857,800

The long let's costs are the usual ones: management, repairs, insurance, Land Use Charge, service charge, professional fees. The shortlet's ₦13,210,000, largest first:

Platform commission: ₦3,600,000
Power: ₦2,400,000
Co-host: ₦1,800,000
Cleaning and linen: ₦1,600,000
Service charge and security: ₦1,200,000
Repairs: ₦1,000,000
Consumables: ₦800,000
Internet: ₦480,000
Insurance and Land Use Charge: ₦330,000

Income tax is at the 2025 bands for individuals. Turnover is under ₦100,000,000. Assuming fixed assets are under ₦250,000,000, the shortlet is a small business and charges no VAT. The example leaves out the furnish-out and its capital allowances, which would cut the shortlet's tax further.

Twice the revenue and two hundred nights of work, for ₦46,400 more.

Now change one thing. Add the 5% to the nightly rate, where it legally belongs. It is a tax on the guest that you collect, not a tax on you. Net becomes ₦9,057,800, and the shortlet wins by ₦1,246,400.

On this property the decision comes down to one thing: whether you collect the consumption tax.

Figures are illustrative. Rates are current. Your numbers are not these numbers. See how Roofteller gets your records ready for your accountant →

Before you choose

Don't choose on gross yield. On our flat, twice the revenue nets far less than twice the profit. Our long-term versus short-term breakdown covers the operating economics.

If you run both, keep them apart. Their VAT, filing and costs differ. Keeping each one's money in its own accounts gives your accountant clean figures for both.

Price the consumption tax into the rate. It is the guest's tax. Absorbing it silently is the most expensive habit in the worked example above.

Set tax aside as you go. Put aside tax from each month's booking income, so the bill is covered when you file.

Keep each listing's money in its own accounts, and record each cost the day you pay it. Run a monthly routine for shortlets, because consumption tax is monthly even though income tax is annual. If you charge VAT, your return is due by the 21st of each month (Tax Administration Act, s.22(1)). Keep records for at least six years after the year the income relates to (s.31). The tax authority can assess you again within six years of an assessment, and at any time for a deliberate misstatement (s.36). Our shortlet bookkeeping guide walks through the monthly routine.

FAQ

Do I have to charge VAT on my shortlet?

If you're a small business on both tests, no (Tax Administration Act, s.22). Outside it, this guide's position is yes: you supply accommodation as a service, not an interest in land. Put it to your accountant before you set next season's rates. Bookings made through Airbnb are different: Airbnb collects and pays the VAT on those stays itself.

I run long lets and shortlets. Do I file separately?

Ask your accountant how to set out both on your return. Keeping the money separate all year means each one's income and costs are already apart.

I live abroad and run shortlets in Lagos. Who taxes me?

Nigeria. Income from a listing in Nigeria is taxable in Nigeria wherever you live (s.4). You're also resident in Nigeria in any year you have a permanent place available for your domestic use here, or substantial economic and immediate family ties here. Residents are taxed on income wherever it arises (s.12). Where another country also taxes that income, the Act provides relief (s.120 and s.121). Get advice on your residency status.

This guide is for informational purposes only and does not constitute tax advice. Tax laws are subject to interpretation and change. Consult a qualified tax professional for advice specific to your situation.