Rental Income Tax Rules in Nigeria (June 26 2025): A Step by Step Guide for New & Old Landlords
Are you among the latest landlord in town? Have you been rooting for what it takes to be a landlord in Nigeria? Did you own a property for rent or lease? are you also an aspiring landlord to be in Nigeria? if yes, then this message is for you because it contains what you a meant to know before or after you have acquired them. Owning a rental, commercial space or leasing property in Nigeria can be a profitable investment, but landlords must comply with rental income tax rules in Nigeria especially the newly reformed tax law as at June 26th 2025 to avoid penalties. Whether you lease a house, apartment, or commercial space, the government expects you to report your rental earnings and pay taxes accordingly.
In this guide, we will break down Nigeria’s rental income tax system in a simple, relatable way and include a sample tax calculation and a our downloadable compliance checklist (PDF) for easy reference so get your calculator and take a glass of water or wine and relax as you read through. But before we proceed, there may be someone in our midst who may not have known what rental income tax rules in Nigeria is before and after the reformation so lets define it.
Rental income tax is the tax that landlords pay to Government of the state or federal from the money they earned from renting out property. It falls under the Personal Income Tax Act (PITA) for individuals and the Company Income Tax Act (CITA) for corporate landlords.
Lets brake it down In simple terms:
If you are an individual landlord who owns rental or leasing property even in different places, you are to pay under Personal Income Tax {PITA} . but
If you are a company or real estate firm, you are to pay under Company Income Tax {CITA}.
I know some landlord will be like; why would i have to pay a rental income tax to government over their personal or commercial property knowing fully well that they built all that with their money but here are the reasons why rental income tax is very important.
Why is Rental Income Tax Important?
The reasons why you are meant to be pay rental income tax is more than just following the law but helps to protect your investment and some pf the key reasons are:
For Legal Protection: A properly drafted rental agreement offers landlords and tenants legal backup in case of disputes. In Nigeria, tenant issues often end up in courts or rent tribunals due to lack of written agreements but having a well signed document helps to protect the landlord’s rights and ensures that the tenant adheres to his o her agreed terms when renting the property, such as rent amount, duration, and property usage.
Proof of Tenancy: A rental agreement serves as official evidence that a landlord has rented or leased out a property and that a tenant legally occupies it. This is crucial especially when dealing with law enforcement agency over a dispute, utility service providers, or in cases where proof of address or legal occupancy is required for business, visa applications, or government documentation.
It Guarantees Payment Security: The agreement clearly states the rent amount, payment schedule, security deposit, and acceptable payment methods. This prevents arguments over unpaid rent, late fees, or unexpected increases. For Nigerian landlords, it also helps in calculating rental income tax since payment records are clearly documented.
Property Care & Compliance: The document defines maintenance responsibilities like who repairs damages, who handles utilities, or manages security. It also ensures compliance with Nigerian tenancy laws, such as Lagos Tenancy Law 2011 or Abuja Rental Guidelines, which is meant to protect both landlord and tenant from legal complications.
Who Should Pay Rental Income Tax in Nigeria?
In our country Nigeria, Rental income tax are meant to be paid by:
Individual landlords : Owning and leasing residential or commercial property.
Corporate landlords : Companies earning income from rental properties.
Property managers/agents : Just like a caretaker who collect rent on behalf of landlords may also handle tax remittance.
How to Calculate Rental Income Tax in Nigeria after June 26 2025 law?
Tax is paid on net rental income.
Net Rental Income = Gross Rent Collected – Allowable Expenses
Allowable expenses include:
Repairs and maintenance costs
Property insurance
Property management fees
Ground rent and rates
Step by Step Guide on How to Pay a Rental Income Tax in Nigeria For Beginners
Determine Your Taxable Income: Add up total rent collected and subtract allowable expenses.
Identify the Right Tax Authority:
FIRS (Federal Inland Revenue Service) is for corporate landlords while
State IRS (e.g., Lagos State IRS) is for individual landlords.
Get a Tax Identification Number (TIN): A TIN is mandatory. Register online or at FIRS/SIRS offices.
Calculate Your Tax Payable: Rental income is taxed under Nigeria’s graduated Personal Income Tax rates within (7% to 24%).
Examples of Rental Income Tax Calculation in Nigeria
Scenario:
Annual Rent Collected: ₦5,000,000
Allowable Expenses: ₦1,200,000
Net Rental Income = ₦3,800,000
Tax Breakdown:
First ₦300,000 @ 7% = ₦21,000
Next ₦300,000 @ 11% = ₦33,000
Next ₦500,000 @ 15% = ₦75,000
Next ₦500,000 @ 19% = ₦95,000
Next ₦1,600,000 @ 21% = ₦336,000
Remaining ₦600,000 @ 24% = ₦144,000
Total Tax Payable = ₦704,000
How to Pay Rental Income Tax
Visit FIRS/SIRS tax portal (or office).
Make payment through an approved bank please avoid sc@m.
Collect and keep your tax receipt.
File annual returns by every March 31st.
Penalties for Non Compliance Landlord Rental Income Tax Payment.
Failing to pay rental income tax as a landlord in Nigeria can result to:
Heavy fines
Accrued interest on unpaid taxes
Legal action or property ownership disputes
Free Rental Income Tax Compliance Checklist
To make compliance easier, download this free PDF checklist designed for Nigerian landlords here:
Rental income can be a steady source of wealth in Nigeria, but landlordsmust comply with tax rules. By following this guide, you can calculate your tax correctly, avoid penalties, and protect your investment.
Rental Income Tax Rules in Nigeria (June 26 2025): A Step by Step Guide for New & Old Landlords
Are you among the latest landlord in town? Have you been rooting for what it takes to be a landlord in Nigeria? Did you own a property for rent or lease? are you also an aspiring landlord to be in Nigeria? if yes, then this message is for you because it contains what you a meant to know before or after you have acquired them. Owning a rental, commercial space or leasing property in Nigeria can be a profitable investment, but landlords must comply with rental income tax rules in Nigeria especially the newly reformed tax law as at June 26th 2025 to avoid penalties. Whether you lease a house, apartment, or commercial space, the government expects you to report your rental earnings and pay taxes accordingly.
In this guide, we will break down Nigeria’s rental income tax system in a simple, relatable way and include a sample tax calculation and a our downloadable compliance checklist (PDF) for easy reference so get your calculator and take a glass of water or wine and relax as you read through. But before we proceed, there may be someone in our midst who may not have known what rental income tax rules in Nigeria is before and after the reformation so lets define it.
Table of Contents
What is Rental Income Tax Rules in Nigeria?
Rental income tax is the tax that landlords pay to Government of the state or federal from the money they earned from renting out property. It falls under the Personal Income Tax Act (PITA) for individuals and the Company Income Tax Act (CITA) for corporate landlords.
Lets brake it down In simple terms:
If you are an individual landlord who owns rental or leasing property even in different places, you are to pay under Personal Income Tax {PITA} . but
If you are a company or real estate firm, you are to pay under Company Income Tax {CITA}.
I know some landlord will be like; why would i have to pay a rental income tax to government over their personal or commercial property knowing fully well that they built all that with their money but here are the reasons why rental income tax is very important.
Why is Rental Income Tax Important?
The reasons why you are meant to be pay rental income tax is more than just following the law but helps to protect your investment and some pf the key reasons are:
Who Should Pay Rental Income Tax in Nigeria?
In our country Nigeria, Rental income tax are meant to be paid by:
Individual landlords : Owning and leasing residential or commercial property.
Corporate landlords : Companies earning income from rental properties.
Property managers/agents : Just like a caretaker who collect rent on behalf of landlords may also handle tax remittance.
How to Calculate Rental Income Tax in Nigeria after June 26 2025 law?
Tax is paid on net rental income.
Allowable expenses include:
Repairs and maintenance costs
Property insurance
Property management fees
Ground rent and rates
Step by Step Guide on How to Pay a Rental Income Tax in Nigeria For Beginners
FIRS (Federal Inland Revenue Service) is for corporate landlords while
State IRS (e.g., Lagos State IRS) is for individual landlords.
Examples of Rental Income Tax Calculation in Nigeria
Scenario:
Annual Rent Collected: ₦5,000,000
Allowable Expenses: ₦1,200,000
Net Rental Income = ₦3,800,000
Tax Breakdown:
First ₦300,000 @ 7% = ₦21,000
Next ₦300,000 @ 11% = ₦33,000
Next ₦500,000 @ 15% = ₦75,000
Next ₦500,000 @ 19% = ₦95,000
Next ₦1,600,000 @ 21% = ₦336,000
Remaining ₦600,000 @ 24% = ₦144,000
Total Tax Payable = ₦704,000
How to Pay Rental Income Tax
Visit FIRS/SIRS tax portal (or office).
Make payment through an approved bank please avoid sc@m.
Collect and keep your tax receipt.
File annual returns by every March 31st.
Penalties for Non Compliance Landlord Rental Income Tax Payment.
Failing to pay rental income tax as a landlord in Nigeria can result to:
Heavy fines
Accrued interest on unpaid taxes
Legal action or property ownership disputes
Free Rental Income Tax Compliance Checklist
To make compliance easier, download this free PDF checklist designed for Nigerian landlords here:
Rental_Income_Tax_Compliance_Checklist in_Nigeria
Rental income can be a steady source of wealth in Nigeria, but landlords must comply with tax rules. By following this guide, you can calculate your tax correctly, avoid penalties, and protect your investment.
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