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•Says 25% construction, bank funds levy false alarm
Chairman, Presidential Fiscal Policy and Tax Reforms Committee, Taiwo Oyedele, has unveiled housing-focused tax reliefs under the new tax laws, declaring that land, buildings and rent are now completely exempt from Value Added Tax (VAT).
According to him, the tax reform, which has already taken effect, eliminates VAT on the purchase of land and completed buildings, while also removing VAT from both residential and commercial rent.
He noted that the move was aimed squarely at reducing the cost of housing, stimulating real estate investment and easing financial pressure on tenants and small businesses.
“Land and buildings are specifically exempt from VAT under the new tax regime. “This means that individuals buying land or completed buildings will no longer pay VAT on such transactions”, he explained.
He added that rent is equally free from VAT, a measure expected to lower accommodation costs nationwide.
Beyond VAT removal, Oyedele dismissed viral claims suggesting that the new law imposes a 25 per cent tax on construction funds, bank balances or business expenses.
Writing on his WhatsApp platform on Sunday, he stated: “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 clarified that the law does not tax money held in bank accounts, does not impose levies on transfers used to purchase building materials and does not introduce any new 25 per cent construction tax. He also rejected claims that implementation has been postponed until 2027.
On construction costs, Oyedele disclosed that contractors can now recover VAT paid on assets and overhead expenses through input VAT credits. This, he said, will significantly reduce overall project costs and improve cash flow management for developers.
In addition, the Withholding Tax rate on construction contracts has been slashed to two per cent — a move designed to help developers retain more liquidity during project execution and reduce dependence on high-interest borrowing.
Homeownership also receives a boost under the new framework. Mortgage interest paid by individuals building their own owner-occupied homes is now tax-deductible. “Mortgage interest is tax-deductible for individuals developing an owner-occupied residential house,” Oyedele said, noting that the measure is intended to encourage more Nigerians to take steps toward owning homes.
Landlords, too, stand to benefit. Property owners earning rental income can deduct legitimate expenses — including repairs, insurance and agency fees — before calculating tax liabilities. Oyedele said this would reduce the effective tax burden on landlords and could incentivise better building maintenance.
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Tenants are not left out. The law provides direct rent relief of up to N500,000, capped at 20 per cent of annual rent. According to Oyedele, this provision will increase disposable income, particularly for low-income earners grappling with rising accommodation costs.
Lease agreements valued below N10 million annually — or ten times the annual minimum wage — are now exempt from stamp duty, further reducing the cost of formal tenancy arrangements for individuals and small businesses.
For investors, the incentives extend even further. Individuals will no longer pay Capital Gains Tax when disposing of a dwelling house or interest in one.
Real Estate Investment Trusts (REITs) will enjoy Companies Income Tax exemption, provided they distribute at least 75 per cent of their dividend or rental income within 12 months of their financial year-end.
Oyedele said this is expected to attract institutional investors and increase housing supply.
The law also grants up to 10 years of tax incentives to companies manufacturing building materials such as iron, steel and domestic appliances under the economic development incentive scheme. This, he noted, will promote local production and reduce reliance on imports.
He added that there is scope to reduce Companies Income Tax for large firms from 30 per cent to 25 per cent to improve Nigeria’s competitiveness.
Small businesses are among the biggest beneficiaries. Small companies will pay zero per cent Companies Income Tax, will not charge VAT and will not suffer Withholding Tax deductions on invoices.
“Claims suggesting a new tax on building materials or bank funds are false and misrepresent the law,” Oyedele stressed.
Ending with a call for calm, he urged Nigerians to rely on facts rather than fear. “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?’”
With the reforms now in force, he maintained that housing costs should fall, and rents should move downward, not up.
