The Nigeria Tax Act 2025 is one of the most important policy changes shaping the real estate market today. Although signed into law in 2025, most of its major tax changes will take effect from 2026, making this the right time for homeowners, tenants, and real estate investors to understand what is coming.
At Fragvest, we believe every investor deserves simple, clear, and reliable information. This guide breaks down everything in the 2025 tax act that concerns real estate, without complexity.
Why the 2025 Tax Act Matters to Real Estate
Real estate remains one of Nigeria’s strongest wealth-building assets. With the new tax act, the government aims to:
- Reduce the cost of owning real estate
- Bring transparency into property transactions
- Support both local and diaspora real estate investors
- Make renting more affordable for tenants
Understanding these changes helps you make smarter, more profitable real estate decisions.
1. VAT Removed on Real Estate Transactions
One of the biggest wins for the real estate sector is the removal of VAT on:
- Residential property purchases
- Residential rent
What this means for buyers and investors
- Real estate is now cheaper to acquire
- You save more money when buying land or a home
- Investment property becomes more attractive due to lower transaction expenses
For developers, it reduces the cost of delivering housing units — which could encourage more construction and increase supply.
2. Rent Relief Introduced — For Tenants Only
The 2025 tax law introduced a new relief specifically for renters.
Tenants can now deduct:
- 20% of annual rent,
- Up to ₦500,000,
- As long as rent is documented and declared.
Why this matters
This encourages transparent rent agreements and reduces the financial burden on tenants.
However, homeowners cannot claim this relief, and landlords cannot apply it to their income.
3. Real Estate Buyers Still Pay Mandatory Transaction Fees
Although VAT has been removed, several property-related charges remain:
- Stamp duty
- Registration/processing fees
- Survey charges
- Governor’s consent fees
- Documentation and legal fees
These fees vary across states, so buyers must always confirm total acquisition costs before paying for real estate.
4. Rental Income Still Taxable for Landlords
If you earn rental income from real estate, you must comply with tax obligations.
Landlords are required to pay:
- Withholding tax (usually 10%)
- Personal income tax (for individuals) or company income tax (for corporate landlords)
Why this matters
The government is tightening compliance on real estate income. Tracking rental cash flow and keeping proper receipts is now essential for every real estate investor.
5. Land Use Charge (LUC) Still Applies State-by-State
The 2025 tax act did not remove or change Land Use Charge.
LUC remains a state-administered property tax charged yearly.
For example:
- In Lagos, residential, commercial, and mixed-use real estate each have different LUC rates.
- Higher-value properties attract higher charges.
What this means for property owners
Regardless of federal reforms, state property taxes remain part of your annual real estate costs.
Investors must include LUC in financial planning and rental pricing strategies.
6. Real Estate Developers Face Stricter Documentation Requirements
Developers acquiring large parcels of land, building estates, or selling units must follow tighter compliance rules on:
- CGT
- Company income tax
- Stamp duty
- Withholding tax
- Proper transfer documentation
This ensures transparency in large-scale real estate development and protects buyers.
7. More Advantages for Diaspora and Foreign Real Estate Investors
With lower acquisition costs, clearer tax rules, and no VAT on residential real estate, Nigeria is becoming more attractive to:
- Diaspora investors
- Foreign property developers
- International real estate buyers
These reforms support long-term sector growth and make Nigerian real estate a more competitive investment option globally.
What the 2025 Tax Act Means for Real Estate
The benefits:
- Real estate becomes cheaper to buy
- Tenants get tax relief
- Investors enjoy clearer and more predictable rules
The challenges:
- Higher CGT for sellers
- Continued taxes on rental income
- Mandatory state property charges remain
Conclusion
The 2025 tax act is reshaping Nigerian real estate in a positive way, promoting affordability, encouraging transparency, and strengthening investor confidence.
At Fragvest, we believe clarity empowers better investment decisions. Whether you’re buying land, investing for rental income, or managing tenants, understanding the new tax structure helps you stay ahead.
