In a bid to alleviate the financial burdens faced by millions of renters amid rising living costs, the Nigerian government has introduced a new house rent tax relief under the Nigeria Tax Act (NTA) 2025. Signed into law by the President on June 26, 2025, this provision comes into effect on January 1, 2026, marking a significant shift in personal income tax (PIT) deductions.
Designed primarily for low- and middle-income earners, the relief allows eligible tenants to deduct up to 20% of their annual rent payments from their taxable income, capped at ₦500,000—whichever is lower.
This replaces the outdated consolidated relief allowance and aims to put more money back into the pockets of everyday Nigerians struggling with housing affordability. As Nigeria’s urban population continues to swell, with cities like Lagos and Abuja seeing skyrocketing rental prices, this tax incentive couldn’t come at a better time. According to recent estimates, over 60% of Nigerians in urban areas are tenants, many of whom spend more than half their income on rent alone.
But accessing this relief isn’t automatic, it requires proactive steps, proper documentation, and adherence to tax filing protocols. In this exclusive guide, we break down everything you need to know to claim your share of this relief, based on insights from tax experts and official guidelines.
Understanding the Relief: What You Can Claim
The house rent tax relief is straightforward in concept but tied to verifiable expenses. Here’s how it works:
● Calculation: Deduct the lower of 20% of your total annual basic rent or ₦500,000 from your taxable income. For example:
● If your yearly rent is ₦1,500,000, you qualify for a ₦300,000 deduction (20% of ₦1,500,000, which is under the cap).
● If your rent totals ₦3,000,000 annually, you’re limited to the ₦500,000 maximum, even though 20% would be ₦600,000.
● Exclusivity: This deduction is available alongside other allowable reliefs, such as pension contributions or National Housing Fund payments, but it specifically targets rent payers.
It’s part of broader tax reforms that introduce a more progressive PIT system, with top marginal rates rising to 25% for high earners, shifting the focus toward supporting the middle class.
Importantly, this isn’t a direct cash rebate but a reduction in your overall tax liability. For Pay-As-You-Earn (PAYE) employees, it could mean a refund on over-deducted taxes at year-end, while self-employed individuals will see lower tax bills upon filing.
Who Qualifies? Eligibility Criteria
Not everyone with a roof over their head can claim this relief; it’s tailored for genuine renters:
● Tenants Only: You must be paying verifiable rent for residential accommodation. Homeowners, those living rent-free (e.g., with family), or individuals in employer-provided housing without out-of-pocket rent costs are ineligible.
● Income Bracket Focus: While not explicitly income-capped, the ₦500,000 limit ensures it benefits low- to middle-income groups most. High earners with exorbitant rents won’t get disproportionate advantages.
● Single Claim Rule: The relief applies once per tax year, regardless of multiple properties rented. It also requires accurate declaration of rent paid, falsifying amounts could lead to penalties or denial of the claim.
Freelancers and remote workers earning foreign income should note that they’ll face up to 23% PIT from 2026, making this relief even more valuable for offsetting taxes.
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Step-by-Step Guide: How to Claim the Relief
Claiming the house rent tax relief involves standard tax filing processes, but preparation is key. Follow these steps to ensure a smooth experience:
1. Compile Your Documentation: Gather evidence of rent payments for the tax year (January to December 2026 for the first claims). Essential items include:
● A formal rental agreement detailing the rent amount, payment schedule, and landlord’s information.
● Rent receipts, bank transfer records, or other proof of payments. Without these, your claim could be rejected by the tax authorities.
2. Prepare Your Annual Tax Return: Use the prescribed PIT form from the Federal Inland Revenue Service (FIRS) or your state’s Internal Revenue Service. For rent paid in 2026, you’ll file by March 31, 2027.
Include a specific claim for the rent relief, calculating the 20% deduction (or cap) and attaching your supporting documents.
3. File Your Return: Submit electronically via the FIRS TaxPro Max platform for efficiency, or in person at a local tax office. If you’re under PAYE, your employer handles monthly deductions, but you can request adjustments through this annual filing if the relief wasn’t initially applied.
4. Review and Receive Benefits: The FIRS will assess your submission. If approved, the deduction lowers your taxable income, potentially resulting in a tax refund or credit for overpayments. Keep records for at least six years in case of audits.
For self-employed individuals or those with multiple income streams, ensure all earnings are declared accurately to avoid complications.
Potential Pitfalls and Tips for Success
While the relief is a welcome change, experts warn of common hurdles. Inaccurate rent declarations or insufficient proof are top reasons for denials.
Additionally, the cap means high-rent payers in premium areas like Ikoyi or Maitama might not feel the full impact. To maximize benefits:
● Negotiate formal leases with landlords to ensure documentation.
● Track payments digitally for easy verification.
● Consult a certified tax professional for complex cases, especially if you’re a freelancer facing the new 23% rate on foreign earnings.
This reform is part of a larger overhaul aiming to simplify taxes and boost revenue from corporations while easing individual burdens.
As Nigeria moves toward a more equitable system, tenants now have a tool to fight back against housing inflation. For the latest updates, visit the FIRS website or speak with a tax advisor—don’t miss out on savings that could add up to ₦500,000 in your favor.
