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.
The clarification is a not-so-veiled rebuttal to a misleading claim by former Rivers State Governor, Mr Rotimi Amaechi, that the Federal Government would automatically deduct N25m if a builder receives N100m for building.
Oyedele said the reform, already in effect, is designed to lower housing costs, attract investment in real estate, and ease financial pressure on tenants and small businesses.
Key Provisions of the Law:
- VAT Exemption: No VAT on land purchases, building sales, or rent (residential and commercial).
- Construction Relief: Contractors can reclaim VAT paid on materials and overheads, reducing project costs.
- Withholding Tax: Cut to 2% on construction contracts, allowing developers to retain more cash.
- Mortgage Deduction: Individuals building their own homes can deduct mortgage interest from taxable income.
- Landlord Benefits: Rental income can be offset by expenses such as repairs, insurance, and agency fees.
- Tenant Relief: Rent relief up to ₦500,000, capped at 20% of annual rent, to support low-income earners.
- Stamp Duty Exemption: Lease agreements below ₦10 million (or 10× minimum wage) are exempt.
- Capital Gains Tax: No tax on selling residential property, encouraging investment.
- REIT Incentives: Real Estate Investment Trusts avoid Companies Income Tax if they distribute 75% of income within 12 months.
- Manufacturing Incentives: Local producers of building materials may qualify for up to 10 years of tax exemptions.
- Corporate Tax Cuts: Potential reduction of Companies Income Tax from 30% to 25% for large businesses.
- Worker Protection: Employer-provided housing benefits capped at 20% of gross income for tax purposes.
- Small Business Relief: Small companies pay 0% Companies Income Tax, are exempt from VAT, and face no Withholding Tax deductions.
Oyedele dismissed circulating claims that the Act imposes a 25% tax on construction funds, bank balances, or business expenses, calling them “false and misleading.” He stressed that the law does not tax bank deposits, building material purchases, or business costs.
“The overall goal of the Nigeria Tax Act 2025 is to make housing more affordable, promote real estate development, support local manufacturing, and provide meaningful rent relief,” Oyedele said.
He urged Nigerians to ignore misinformation, adding: “Fact not fear; evidence beats emotion. If anyone makes an alarming claim, ask them, ‘Where is it in the law?’”
