Unlocking New Tax Laws’ Benefits For Renters, Home Buyers

Nigeria’s recently enacted tax laws are seen to be a boost for house renters, buyers, and stakeholders across the real estate sector. They promise to ease financial burdens and bring more transparency to tax processes related to housing.

Partner & West Africa Tax Leader at Deloitte, Yomi Olugbenro, who shared valuable insights at a Continuous Development Programme by the Royal Institute of Chartered Surveyors, Nigeria Group in Lagos, stated, “The new tax law enhances transparency by eliminating subjective decisions in tax assessments. Deductible expenses are now clearly defined as those wholly and exclusively incurred in generating profits, which will bring predictability and fairness to taxpayers in the real estate market.”

Homebuyers and renters stand out among the chief beneficiaries

Olugbenro explained, “Value Added Tax (VAT) exemptions on land and property sales, including interest in land and rent of residential properties, provide direct cost relief. This will likely lower construction expenses and subsequently reduce house prices, offering affordable housing opportunities for many Nigerians.”

He also spotlighted the capital gains tax exemption: “Homeowners disposing of personal residential property will enjoy savings through capital gains tax exemptions, reducing the overall cost burden of owning and selling a home.”

He said renters had also received notable attention within the new tax framework. The introduction of a rent payment deduction allows individuals to reduce taxable income by 20 per cent of annual rent paid, capped at N500,000. This targeted relief is designed to lessen rental costs while encouraging payment documentation and compliance.

On another front, the benefits-in-kind (BIK) valuation rule has been capped at 20% of an individual’s annual salary for rent-free accommodation, says Olugbenro. He notes, “This change will motivate more efficient tax planning and reduce the excessive tax impact on management staff receiving such benefits.”

On the developers’ side, VAT exemption on input materials reduces the high costs associated with construction materials, which are largely imported. Olugbenro pointed out, “Removing VAT from these inputs grants a huge cost relief and could speed up the delivery of housing projects across the country.” He added, “Lower withholding tax rates for local contractors from 2.5 per cent to 2.0 per cent, and 5.0 per cent for foreign contractors, also improve the overall business environment.”

This tax law brings further advantages for homeowners and investors in real estate investment trusts (REITs). Olugbenro confirmed, “Investors and REITs now enjoy withholding tax exemptions on dividend distributions, enhancing returns and boosting capital inflows into the real estate sector.” He also revealed, “VAT exemptions on real estate sales and leases will further reduce acquisition and transaction costs for REITs, encouraging investment in income-generating properties.”

CEO of Adamakin Investment and Works Limited, Akindele Afolabi, also reinforced the positive outlook:

“The real estate sector in Nigeria has always been an underutilised wealth. These tax reforms will unlock significant economic potential by improving mortgage access and encouraging property investments. Proper land title registration at the state level would further strengthen this progress by empowering financial institutions and attracting foreign and local investors.”

Both speakers agreed that Nigeria’s 2025 tax reforms introduce multiple benefits tailored for renters and homeowners. Exemptions on VAT, capital gains, and improved tax relief on rent reduce financial burdens, while targeted and transparent tax policies create a conducive environment for real estate growth. This legal framework is set to enhance affordability, stimulate investment, and boost Nigeria’s housing market overall.