15 Deductions Against Rent in the Nigeria Tax Act 2025

The Nigeria Tax Act 2025 eliminated the Consolidated Relief Allowance. The expenses you can prove now matter more than ever.

If you pay tax on your full rent, you pay tax on money you spent to earn it.

Repairs, insurance, management fees, legal costs and Land Use Charge all reduce your taxable income, as long as you claim them and can prove them. A landlord with ₦5,000,000 in rent and ₦1,200,000 of documented expenses saves ₦216,000 in tax.

This guide covers the 15 deductions you can claim, what isn't deductible, and how to keep the records that back them.

Key takeaways

Expenses wholly and exclusively incurred to earn your rent are deductible. You need proof for each one.
Repairs are deductible. Improvements aren't, but they qualify for capital allowances.
Interest on a loan used to buy or build a rental property is deductible, for individuals and companies.
If you're not resident, tax deducted from your rent and paid over is your final tax on it.
A separate account for rent and property costs gives you the records to claim.

How rental income is taxed in Nigeria

Two tracks. Which one applies depends on whether you hold property as an individual or through a company.

Individual landlords

Rental income is personal income. It gets added to your salary, business income, and investment income, then taxed at progressive rates under the NTA 2025.

Taxable income (₦)	Rate
First 800,000	0%
800,001 – 3,000,000	15%
3,000,001 – 12,000,000	18%
12,000,001 – 25,000,000	21%
25,000,001 – 50,000,000	23%
Above 50,000,000	25%

If your taxable income is ₦800,000 or less, you owe nothing.

If a company owns the property

A company pays company income tax on its profits. A small company pays 0%. Any other company pays 30%, plus a 4% development levy. A small company has a turnover of ₦50 million or less, fixed assets of no more than ₦250 million, and doesn't provide professional services. If the company owns the building, ask your accountant whether its value counts toward that limit.

The deductions below apply to companies too. Taking money out of the company is taxed as well, so ask your accountant whether a company would save you tax.

The deductibility test

The Nigeria Tax Act 2025 allows expenses "wholly and exclusively incurred in the production of the income" (s.20).

In plain language, the expense must relate directly to earning rent. Personal expenses don't qualify (s.21). If a cost is partly personal, check with your accountant before you claim it.

One rule applies across the board. If you can't prove the expense, you can't deduct it. Receipts, invoices, contracts, and account statements are your proof.

The 15 deductions

1. Repairs and maintenance

Roof repairs. Plumbing. Electrical faults. Repainting. Fixing tenant damage. Replacing broken fixtures. All deductible.

The line is between restoring and improving. Fixing a leaking roof is a deductible repair. Replacing a zinc roof with a stone-coated roof is an improvement and counts as capital expenditure. It isn't deductible as an expense, but it qualifies for capital allowances (see #15).

A landlord earning ₦5,000,000 in rent who spends ₦500,000 repairing a leaking roof and repainting the building deducts the full ₦500,000 from taxable income.

2. Property insurance premiums

Fire, theft, flood, and natural disaster coverage on the rental property. Deductible.

If insurance pays for a repair, you can't also deduct that repair.

3. Property management fees

Fees paid to property managers for tenant placement, rent oversight, maintenance coordination, and reporting. Deductible as a cost of earning rental income.

4. Agent and broker commissions

Fees paid to agents or brokers for securing tenants. Deductible.

Ask your accountant whether you need to deduct tax from the agent's fee. Keep a record of every payment.

5. Legal fees

Drafting tenancy agreements. Defending title disputes. Resolving boundary issues. Regularizing property documents. All deductible when related to the rental business.

Legal fees for buying the property are capital, so they aren't deductible as an expense.

6. Land Use Charge and tenement rates

State and local government taxes levied on your rental property. Deductible.

Deduct what you actually paid. Taxes on income are never deductible (s.21(e)).

7. Advertising and vacancy costs

Listing fees. Online ads. Signage. Marketing expenses to find tenants for vacant units. Deductible.

A vacant unit earns no rent. The money you spend filling it is a direct cost of producing rental income.

8. Security costs

Security guard wages. Gateman salary. Operational security for the property. Deductible.

Security equipment like CCTV cameras and access control systems is capital expenditure. It qualifies for capital allowances at 20% a year. A perimeter fence is a structure, at 10%.

9. Utility costs borne by the landlord

Electricity, water, and waste disposal for common areas or included in the rental arrangement. Deductible when linked to the rental property.

If you pay the electricity bill for lighting in the common areas of a block of flats, that's deductible. If you're paying your own personal electricity bill and trying to call it a rental expense, that's not.

10. Service charge expenses

Estate service charges and maintenance levies paid by the landlord. Deductible.

These are charges your estate or property management company bills you for maintaining shared infrastructure like roads, drainage, common areas, and generators. If you pay them to keep your rental property operational, they reduce your taxable income.

11. Professional fees

Accountancy fees. Tax advisory fees. Tax return preparation costs. Deductible when related to the rental business.

12. Travel expenses for property management

Travel costs for property inspections, tenant meetings and viewings. The trip must be wholly and exclusively for the property.

13. Bad debt (unrecoverable rent)

Rent that went bad during the year. Deductible (s.20(1)(h)). You need evidence it's bad: demand letters, failed recovery attempts, legal action. Rent owed by a related party doesn't qualify. If you recover it later, it's income in the year you recover it (s.20(2)).

14. Mortgage interest

Interest on a loan used to buy or build a rental property is deductible. The Act allows interest on debt used to earn the income (s.20(1)(a)).

A company's interest on loans from a connected person is capped at 30% of its earnings before interest, taxes, depreciation and amortisation (Third Schedule).

Separately, you can deduct interest on a loan to build the home you live in (s.30(2)(a)(iv)). That relief is for your own home.

Principal repayments are never deductible.

15. Depreciation (capital allowances)

Nigeria does not allow accounting depreciation as a tax deduction. Instead, capital allowances apply at statutory rates.

Asset	Annual rate
Buildings	10%
Furniture and fittings	20%
Plant and machinery	20%
Motor vehicles	25%

If you spend ₦20,000,000 constructing a rental building, you claim ₦2,000,000 a year in capital allowances.

One restriction: where an asset is only partly used to generate rental income, the allowance is prorated to the portion that does. Unutilised capital allowance carries forward to the next year.

When you sell, the allowances you claimed come off the property's cost, so your gain is larger (s.39).

Worked example: how deductions save you money

Scenario: You earn ₦5,000,000 in annual rent from two properties. You have no other taxable income. You spent ₦1,200,000 on allowable expenses: repairs (₦500,000), property management (₦300,000), insurance (₦150,000), Land Use Charge (₦100,000), and professional fees (₦150,000).

Without deductions: Taxable income = ₦5,000,000 Tax = ₦0 on first ₦800K + ₦330,000 on next ₦2.2M (15%) + ₦360,000 on next ₦2M (18%) = ₦690,000

With deductions: Taxable income = ₦5,000,000 – ₦1,200,000 = ₦3,800,000 Tax = ₦0 on first ₦800K + ₦330,000 on next ₦2.2M (15%) + ₦144,000 on next ₦800K (18%) = ₦474,000

You save ₦216,000. That is the cost of ignoring deductions, and it scales up with every additional property and every additional naira of allowable expense.

What isn't deductible

Not every property expense reduces your tax bill.

Capital improvements like adding a new room, converting a 2-bedroom to a 3-bedroom, or installing a borehole where none existed. These improve the property beyond its original condition. Not deductible as expenses. You can claim capital allowances on qualifying improvements instead.

Personal expenses unrelated to the rental property.

Income tax. You cannot deduct income tax from income tax.

Mortgage principal repayments. Interest is deductible (see #14 above), but principal never is.

Fines and penalties from regulatory or tax authorities.

Any expense without documentation. No receipt, no deduction.

Withholding tax on rent

Some tenants deduct tax from your rent and pay it to the tax authority (Nigeria Tax Administration Act 2025, s.51). Check with your accountant whether yours should.

If you're resident in Nigeria, that tax isn't the end of it. You declare the full rent, and the tax deducted is credited against your bill. Keep the evidence your tenant gives you.

If you're not resident, tax deducted from your rent and paid over is your final tax on that rent (s.51(2)).

How to track deductions all year

Tax filing is painful when you spend March hunting for receipts from eleven months ago. The fix is simple: separate your rental finances from everything else.

Open a separate account for your rent and property expenses. Every naira of rent received goes in. Every property expense goes out. At the end of the year, your account statement is your deduction schedule. Our guide to why you need a separate account for rental property covers the records the law already asks for.

Keep receipts, invoices and contracts for at least six years after the year the income relates to (Nigeria Tax Administration Act 2025, s.31). The tax authority can assess you again within six years of an assessment, and at any time if a return was deliberately misstated (s.36).

If you own multiple properties, separate each property's income and expenses. Know what each property earns and what it costs. This is also how you identify which properties are profitable and which ones are draining your portfolio.

Record the date, amount, vendor, and purpose of every expense. A ₦200,000 receipt for "maintenance" tells you nothing in March. "₦200,000, plumbing repair, Unit 3, AquaFix Ltd, July 14" tells you everything.

With Roofteller, you open property-specific accounts under one login, in your own name or your company's. Every transaction in a property's account lands in that property's books.

Filing your return

If you own property in your own name, you file a return every year, even if you owe nothing. You file with your state's tax authority. If you live abroad, check with your accountant which state that is, and its filing date.

If a company owns the property, it files a company income tax return with the Nigeria Revenue Service (NRS, formerly FIRS), within six months of the end of its accounting year.

What you need: tenancy agreements, rental income records and account statements, evidence of any tax your tenants deducted, receipts and invoices for all deductible expenses, and property title documents.

You need a Tax ID (Nigeria Tax Administration Act 2025, s.4).

Late filing carries penalties (s.101). ₦100,000 for the first month late. ₦50,000 for every additional month.

Other changes landlords should know

Gains on a sale are taxed as income. The Capital Gains Tax Act is repealed. Your gain on selling a property is added to your taxable income and taxed at your income tax rates, up to 25%. A company's gain is part of its profits, taxed at 0% for a small company and 30% for any other. Once in your lifetime, the gain on your principal private residence is exempt (s.51).

Residency goes beyond days in the country. You're 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. That holds even if you live in London, Toronto or Houston. 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).

Stamp duty on leases is now in the Act. A lease up to 7 years pays 0.78%, and above 7 years 3% (Eighth Schedule). Smaller leases are exempt (s.135). Check whether yours is. The tenant pays it, within 30 days of signing (s.126). An unstamped lease can't be used as evidence in civil proceedings (s.127).

FAQ

Do I need to pay tax on rental income if my tenant already paid withholding tax?

Yes, if you're resident in Nigeria. You declare the full rent, and the tax already deducted counts toward your bill. If you're not resident, tax deducted from your rent and paid over is your final tax on it.

Can I deduct the cost of renovating my rental property?

It depends on what you did. Repairs that restore the property to its original condition (fixing a roof, repainting, replacing broken plumbing) are deductible. Improvements that upgrade the property beyond its original state (adding rooms, converting floor plans, installing new infrastructure) are capital expenditure. Not immediately deductible, but you can claim capital allowances at 10% a year on buildings and 20% on furniture and fittings.

I live abroad. Do I still need to file Nigerian taxes on my rental income?

Yes. Rent from property in Nigeria is taxable in Nigeria wherever you live (Nigeria Tax Act 2025, s.4). You're also resident in any year you have a permanent place available for your domestic use in Nigeria, or substantial economic and immediate family ties here. Residents are taxed on income wherever it arises. Get professional 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.