As Nigeria rolls out sweeping tax reforms under the newly gazetted Nigeria Tax Act, one of the most significant changes affecting the rental market is the rent relief provision. Beginning in 2026, tenants will be able to deduct 20% of their annual rent from their taxable income—capped at ₦500,000—provided certain conditions are met. This is a big win especially for low to middle-income earners who rent homes.
In this post, we’ll break down what the rent relief is, who qualifies, how it works, concrete examples, and tips to make sure your claim is compliant.
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The Nigeria Tax Act, along with related reforms (Tax Administration Act, Nigeria Revenue Service Act, etc.), was passed and officially gazetted on 10th September 2025. These reforms go into effect from 1st January 2026.
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Among its many provisions is Section 30(2)(a), enabling tenants to deduct from taxable income 20% of rent paid annually, but not exceeding ₦500,000.
Among its many provisions is Section 30(2)(a), enabling tenants to deduct from taxable income 20% of rent paid annually, but not exceeding ₦500,000.
Only verified rent payments (i.e. documented rent, declared correctly) are eligible. Rent must be declared to the relevant tax authority. Homeowners, those renting without documented agreements, or living rent-free are not eligible.
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If your annual rent is ₦1,500,000, 20% of that is ₦300,000. Since ₦300,000 < ₦500,000 cap, you can deduct ₦300,000.
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If your annual rent is ₦3,000,000, 20% is ₦600,000, but because of the cap, you can only deduct ₦500,000.
These deductions reduce your taxable income, so you pay income tax on a lower base—resulting in less tax owed.
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Affordability boost: Renters get relief, effectively lowering the after-tax cost of housing.
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Better documentation: This incentivises properly documented tenancy agreements and rent payment receipts.
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Rental market transparency: Developers and landlords may have stronger incentive to formalise contracts and cooperate with tenants to issue proper documentation.
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Tax equity: The cap prevents this benefit from being disproportionately claimed by ultra-high renters, keeping focus on middle and lower income groups.
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Get a formal rental agreement
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Written lease, signed by both parties.
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Ensure rent amount, payment schedule, and landlord’s details are clearly stated.
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Keep receipts or proof of rent paid
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Bank transfers, stamped receipts, or other verifiable proof.
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Document every payment; avoid informal “handshake” arrangements without records.
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Declare actual rent paid
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Under-declaring or inflating could lead to audit, penalties, or being denied relief.
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Follow tax authority guidelines
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Watch for how Forms are issued, required attachments, deadlines, and electronic vs paper submissions.
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Know your landlord
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Make sure they are willing to issue and/or sign rent-related documents.
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Some tenants may not have documented rental agreements or formal records of payments. Without those, they may be disqualified.
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High inflation or skyrocketing rent might make it hard for many to fully benefit if rent payments exceed what they can comfortably pay.
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Landlords resisting formalisation or refusing to provide receipts.
The 2025 tax reforms in Nigeria introduce a welcome relief for tenants: a chance to deduct 20% of rent paid (up to ₦500,000) from taxable income. While there are clear eligibility rules and documentation requirements, with the proper paperwork in place, many renters—especially in the middle‐income bracket—can benefit meaningfully.
At FendiniHomes, we encourage tenants to ensure their leases are formalised, receipts are kept, and rent payments are clearly documented. If you’re renting, now is the time to get your paperwork in order so you can take full advantage of this law when it takes effect in January 2026.
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