Taiwo Oyedele
Picnews
The Nigeria Tax Act 2025 has introduced VAT exemptions on land, buildings, and rent, aiming to make housing more affordable and stimulate real estate development. According to Taiwo Oyedele, Chairman of the Presidential Fiscal Policy and Tax Reforms Committee, the exemption covers the purchase of land and completed buildings, as well as residential and commercial rent.
This move is expected to lower overall property transaction costs and reduce the financial burden on Nigerians seeking accommodation or business premises. Oyedele emphasized that the exemption also applies to lease agreements valued below N10 million annually, or ten times the annual minimum wage, reducing the cost of formal tenancy arrangements.
The VAT exemption is part of a broader reform aimed at supporting low-income earners and small businesses. Other benefits include zero VAT on basic food items, education services, and health and medical services. Small companies will enjoy zero per cent Companies Income Tax, exemption from charging VAT, and freedom from Withholding Tax deductions.
Landlords will also benefit from deductible expenses such as repairs, insurance, and agency fees when calculating tax on rental income. This provision may reduce their tax burden and incentivize better property maintenance.
Manufacturers of building materials, including iron, steel, and domestic appliances, may qualify for tax exemptions under the economic development incentive scheme for up to 10 years, promoting local production and reducing dependence on imports.
The new law also introduces rent relief of up to N500,000, capped at 20% of annual rent, increasing disposable income for low- and middle-income earners. Individuals disposing of a dwelling house or an interest in one will no longer pay Capital Gains Tax, stimulating investment in residential properties.
Real Estate Investment Trusts (REITs) will benefit from Companies Income Tax exemption if they distribute at least 75% of their dividend or rental income within 12 months after the financial year, attracting institutional investors and expanding housing supply.
The Presidential Fiscal Policy and Tax Reforms Committee has dismissed claims that the new law introduces a 25% tax on construction funds, bank balances, or business expenses, describing such reports as false and misleading.
