Rent you collect in Nigeria is taxable income, and short-let earnings are too. It doesn’t matter whether the tenant stays a year or a weekend; the money counts either way.
If you own the property personally, the profit is added to your other income and taxed at the personal income tax bands, from 0% on the first ₦800,000 up to 25%. If a company owns it, the company pays company income tax.
You’re taxed on profit, not on the gross rent, so the costs of earning it matter. Below is how the Nigeria Tax Act 2025 treats landlords and short-let hosts, with worked examples you can follow.
Who pays tax on rent, and to whom
| Owner | Tax on rental profit | Paid to |
|---|---|---|
| Individual | Personal income tax bands, 0% to 25% | Your state’s internal revenue service |
| Small company | 0% | Nigeria Revenue Service (NRS) |
| Other company | 30%, plus the 4% development levy | Nigeria Revenue Service (NRS) |
A small company is one with turnover of ₦100 million or less, fixed assets under ₦250 million, and no professional services. A building counts as a fixed asset, so a property company crosses the ₦250 million line quickly. Details are in how the new law treats small businesses.
What you can deduct from rent
The Act allows expenses incurred wholly and exclusively to produce the income. For a landlord, that usually covers:
- repairs to the building, plumbing, wiring and fittings
- wages of a caretaker, cleaner or security guard you employ for the property
- interest on a loan used to build or buy the rental property
- costs of defending your title to the property
- rent that the tenant owes you and will never pay, if it’s genuinely bad debt
Building a new flat, adding a floor, or buying furniture and appliances is capital spending. You can’t deduct it in one go; capital allowances spread the cost of qualifying items over several years. Depreciation in your accounts doesn’t count, and neither does personal spending.
Example: a landlord with two flats
Example only. A retired teacher in Ibadan lets two flats at ₦1,800,000 a year each. She has no other taxable income.
- Rent received: ₦3,600,000
- Repairs: ₦300,000. Caretaker’s wages: ₦200,000.
- Rental profit: ₦3,100,000
- First ₦800,000 at 0%: ₦0
- Next ₦2,200,000 at 15%: ₦330,000
- Last ₦100,000 at 18%: ₦18,000
- Tax for the year: ₦348,000
If she also drew a salary, the rent would sit on top of it and more of it would fall in the 18% band. The personal income tax calculator shows how the bands apply to a different total.
Short-let apartments
Short-let income is taxed the same way: total bookings minus the costs of running the apartment. Because a short-let is closer to running a small hospitality business, the list of costs is longer. Booking platform fees, cleaning, laundry, electricity, diesel, internet, TV subscriptions and toiletries for guests are all running costs of the business.
Example only, with made-up figures. A one-bedroom short-let in Lekki books 180 nights at ₦75,000, so ₦13,500,000 for the year. Running costs come to ₦3,500,000. Profit: ₦10,000,000.
- First ₦800,000 at 0%: ₦0
- Next ₦2,200,000 at 15%: ₦330,000
- Last ₦7,000,000 at 18%: ₦1,260,000
- Tax for the year: ₦1,590,000
Keep every booking statement and receipt. Short-let costs are many and small, and the ones you can’t prove are the ones a tax officer will refuse. If you top up the apartment’s prepaid meter or renew TV from your Snapiro naira balance, each payment is logged under Activity with a receipt, and you get 1% cashback on electricity and DStv payments. The steps are the same as buying Ikeja Electric tokens online.
Is there VAT on rent or short-lets?
The Act lists land and buildings, including any interest in them, as exempt from VAT, so ordinary rent doesn’t carry VAT. A short-let that bundles in hotel-style extras such as meals, airport pickups or tours is a less clear case. If you offer those, ask a tax adviser how they should be treated.
When a company tenant deducts withholding tax
When the tenant is a company or a government body, it will usually deduct 10% withholding tax from the rent and pay you the rest. Ask for the withholding tax receipt every time. That 10% is not extra tax; it’s a credit you set against your final bill when you file. See how to calculate withholding tax for the arithmetic.
Property abroad and selling a property
If you live in Nigeria and earn rent from a property abroad, the Act exempts foreign rent that you bring into Nigeria through approved channels, such as a bank. Rent kept abroad doesn’t get that exemption.
Selling a rental property is a separate event. The gain is chargeable and, for an individual, added to income for the year. The exemption for your own home can only be used once in your lifetime under the new law. What capital gains tax is explains the basics.
Filing and records
Individual landlords declare rent on the yearly self-assessment return to their state’s internal revenue service, normally by 31 March for the previous year. Missing it can cost ₦100,000 for the first month and ₦50,000 for each month after. The process is in how to file tax returns in Nigeria.
Keep tenancy agreements, rent receipts, booking statements, repair invoices, wage records and withholding tax receipts for each year.
Landlord questions
Is it tax on gross rent or on profit?
On profit. Allowable costs come off first, then the bands apply.
My tenant paid two years upfront. How is that taxed?
The rules on when advance rent counts as income can be technical, so ask your state tax office or an adviser how they want it spread before you file.
I pay rent and also collect rent. Can I claim rent relief?
Yes, if you pay rent on the home you live in. Rent relief is 20% of the rent you pay, capped at ₦500,000, and it reduces your taxable income, including rental profit.
General information only, not personal advice. Landlords who hold property through a company can test the numbers on the company income tax calculator.
