Taiwo Oyedele, chairman of the Presidential Fiscal Policy and Tax Reforms Committee, says land, buildings and rent are now fully exempted from Value Added Tax under the Nigeria Tax Act 2025.
He explained that the law, which has commenced, aims to lower housing costs, encourage real estate investment and provide relief for tenants and small businesses nationwide.
According to him, buyers of land or completed buildings will no longer pay VAT on such transactions, while both residential and commercial rent are also exempt.
Oyedele said the measure would reduce property transaction costs and ease financial pressure on Nigerians seeking accommodation.
He added that contractors can now recover VAT paid on certain construction materials and services through input VAT credit, helping developers manage project expenses more efficiently.
Dismissing claims circulating online about new taxes, he wrote on his X platform: “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 the law does not tax money kept in bank accounts, impose levies on transfers used to buy building materials or introduce any 25 per cent construction or business cost tax, adding that implementation has not been postponed until 2027.
Oyedele stated that the law focuses on making housing affordable and stimulating growth in the property sector.
On construction contracts, he disclosed that Withholding Tax has been reduced to two percent to help developers retain more working capital and reduce reliance on borrowing.
He added: “Mortgage interest is tax-deductible for individuals developing an owner-occupied residential house,” explaining that the provision encourages home ownership.
For landlords, he said rental income earners can deduct expenses such as repairs, insurance and agency fees before tax assessment, which may promote better building maintenance.
He also noted that tenants can claim rent relief of up to N500,000, capped at 20 percent of annual rent, to improve disposable income.
Lease agreements valued below N10 million, or ten times the annual minimum wage, are exempt from stamp duty, reducing the cost of formal tenancy agreements.
Oyedele further said individuals will no longer pay Capital Gains Tax when disposing of a dwelling house or interest in one, while Real Estate Investment Trusts will enjoy Companies Income Tax exemption if they distribute at least 75 percent of dividends or rental income within 12 months.
Companies producing building materials such as iron, steel and domestic appliances may qualify for tax exemptions for up to 10 years under the economic development incentive scheme.
He added that there is also provision to reduce Companies Income Tax for large businesses from 30 percent to 25 percent to improve competitiveness and attract investment.
The chairman said the tax framework protects workers and small businesses, noting that employer-provided accommodation will be taxed only on rental value capped at 20 percent of annual gross income.
Small companies, he added, will benefit from zero percent Companies Income Tax and will not charge VAT or have Withholding Tax deducted from payments.
“Claims suggesting a new tax on building materials or bank funds are false and misrepresent the law,” Oyedele said.
He maintained that the law aims to make housing affordable, support real estate development and strengthen local manufacturing.
Concluding, he said, “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 added that with the reforms in place, housing costs and rent should decline rather than increase.
