- The Chairman of the Presidential Fiscal Policy and Tax Reforms Committee, Taiwo Oyedele, disclosed that VAT on land, buildings, and rent has been removed under the Nigeria Tax Act 2025
- The law aims to make housing more affordable, support tenants, and boost real estate investment
- He also dismissed false claims of a 25% tax on bank funds, construction, or business expenses
The Chairman of the Presidential Fiscal Policy and Tax Reforms Committee, Taiwo Oyedele, has confirmed that land, buildings, and rent are now fully exempt from Value Added Tax (VAT) under the Nigeria Tax Act 2025.
Oyedele explained that the new law, which has already commenced, aims to reduce housing costs, encourage real estate investment, and provide relief for tenants and small businesses nationwide.
“Land and buildings are specifically exempt from VAT under the new tax regime.
“This means individuals buying land or completed buildings will no longer pay VAT on such transactions. The exemption also applies to rent, making both residential and commercial rent completely free from VAT,” Oyedele said.
He added that the removal of VAT on these properties is expected to lower the overall cost of real estate transactions and ease financial pressures for Nigerians seeking accommodation.
Oyedele also addressed construction-related VAT, stating that contractors can now recover VAT paid on construction materials and services through input VAT credit, reducing project costs.
He dismissed claims circulating online that the Nigeria Tax Act 2025 introduces a 25% tax on construction funds, bank balances, or business expenses.
“Contrary to the misinformation seeking to create fear, panic and disaffection, the Nigeria Tax Act 2025 has already commenced and does not impose a 25 per cent tax on construction funds, bank balances, or business expenses,” he said.
He clarified that the law does not tax money in bank accounts, transfers for building materials, or impose any 25% tax on construction or business costs. There is also no postponement of implementation until 2027, contrary to circulating messages.
The law also introduces other incentives to boost housing and property development. Oyedele said the Withholding Tax rate on construction contracts has been reduced to 2%, enabling developers to retain more cash and reduce reliance on expensive borrowing.
Additionally, mortgage interest for individuals building owner-occupied homes is now tax-deductible. “Mortgage interest is tax-deductible for individuals developing an owner-occupied residential house,” he said, noting this encourages homeownership.
For landlords, expenses such as repairs, insurance, and agency fees can now be deducted from taxable rental income, reducing tax burdens and encouraging better building maintenance. Tenants also benefit from direct rent relief, with individuals able to claim up to N500,000 or 20% of their annual rent.
Lease agreements with an annual value below N10 million, or ten times the minimum wage, are exempt from stamp duty, easing costs for small businesses and ordinary Nigerians.
Capital Gains Tax is also waived on the disposal of dwelling houses or interests in them, encouraging investment in residential property.
Oyedele added that Real Estate Investment Trusts (REITs) distributing at least 75% of their dividend or rental income within 12 months are exempt from Companies Income Tax, expected to attract institutional investors and increase housing supply.
Companies involved in manufacturing building materials, such as iron, steel, and domestic appliances, can qualify for tax exemptions under the economic development incentive scheme for up to 10 years, promoting local production and reducing reliance on imports. Large businesses may see their Companies Income Tax rate fall from 30% to 25%, improving competitiveness and attracting private sector investment.
The new tax framework also protects workers and small businesses. The taxable value of employer-provided accommodation is capped at 20% of the employee’s gross annual income, ensuring workers are not overtaxed.
Small companies enjoy zero Companies Income Tax, VAT exemption, and no Withholding Tax deductions, giving contractors and suppliers more room to grow.
“Claims suggesting a new tax on building materials or bank funds are false and misrepresent the law,” Oyedele said, emphasising that the Nigeria Tax Act 2025 is designed to make housing more affordable, promote real estate development, support local manufacturing, and grant meaningful rent relief.
Ending his message with a call for calm and clarity, Oyedele advised, “Fact not fear, evidence beats emotion. If anyone makes an alarming claim or tries to misinform you, ask them, ‘Where is it in the law?’”
He concluded that with the new tax laws in place, housing costs should decrease, and rent is expected to go down, not up.