Tax on Rental Income in Nigeria (2026): What Landlords Owe and the Records to Keep

Do landlords pay tax in Nigeria?

Yes. Section 4 of the Nigeria Tax Act 2025 lists the income that is chargeable to tax, and it expressly includes rents arising from a right granted for the use or occupation of any property. If you own a flat, a house or a shop in your own name and collect rent on it, that rent forms part of your income for the year.

Individual landlords pay personal income tax, and personal income tax is collected by the state, not the federal government. Which state depends on where you live, not where the property is. The residence rules in the First Schedule of the Nigeria Tax Administration Act tie an individual to the state where they have their place, or principal place, of residence. A landlord who lives in Lagos files with the Lagos State Internal Revenue Service (LIRS), even if the property is in Ibadan or Abuja.

Filing is required even when no tax ends up being due. Section 13 of the Nigeria Tax Administration Act requires every taxable person to file a return of income each year, whether or not they are liable to pay tax, without waiting for a notice or demand from the tax authority.

If a company owns the property, the rent belongs to the company and is taxed under companies income tax, not personal income tax. Section 56 of the Nigeria Tax Act sets the rate at 30% for most companies and 0% for a small company. Official texts of the Act differ on the threshold: the National Assembly's current text says gross turnover of N100,000,000 or less a year, while an earlier published version said N50,000,000 and excluded businesses providing professional services. Both cap total fixed assets at N250,000,000. The chair of the tax reform committee has said N100,000,000 is correct, but check eligibility against the authenticated text with your adviser. A company holding even one substantial property can exceed the fixed asset limit, and a 0% rate does not remove the duty to file.

Companies file with the Nigeria Revenue Service rather than the state, on their own timetable. If you are deciding whether to hold property personally or through a company, that is a structuring decision for an adviser, not something to settle from an article.

What counts as rental income

The starting point is simple: rent received for the use of your property. Where landlords get caught out is everything around the rent.

Advance rent is the common problem. Rent paid two years upfront in 2026 is cash received in 2026, but it covers 2026 and 2027. We could not find a provision in the Nigeria Tax Act that says plainly whether a landlord is taxed on the whole sum in the year it is received or on the part that relates to each year. The JRB's 2026 guidelines pro-rate a tenant's rent relief across the years a payment covers, but that is a rule for the tenant's relief, not for how a landlord recognises income. Your accounting period and income-recognition method matter, so take advice where rent arrives substantially in advance, and make sure your records show the exact period every payment covers so either treatment can be applied.

Service charge needs similar care. Money you collect and spend on the building on the tenants' behalf is different from money you keep. If you take a surplus, or charge more than the services cost, the extra looks like income. Keep service charge on its own record, separate from rent, so the difference is visible.

Refundable caution or security deposits are held for the tenant and are not normally income while you hold them. Treat any part you keep at the end of a tenancy, for damage or unpaid rent, as something to raise with your adviser.

The 2026 tax rates for individual landlords

Rental income is added to your other income for the year, such as salary or business profit, and the total is taxed on one progressive scale. The bands in the Fourth Schedule of the Nigeria Tax Act 2025 apply to chargeable income after eligible deductions, set out below.

As an illustration, a landlord with N6,000,000 of chargeable income after the applicable deductions would pay nothing on the first N800,000, N330,000 on the next N2,200,000 and N540,000 on the remaining N3,000,000, a total of N870,000 before crediting any tax already withheld. Gross rent alone does not set the final bill. The same rent on top of a salary would be taxed at higher rates, because it sits on top of the salary in the bands.

• First N800,000 at 0%
• Next N2,200,000 at 15%
• Next N9,000,000 at 18%
• Next N13,000,000 at 21%
• Next N25,000,000 at 23%
• Above N50,000,000 at 25%

What you can deduct

The deductions are where landlords either save money or lose it. Section 20 of the Act allows expenses that are wholly and exclusively incurred in producing the income, and lists items that include interest on debt used to generate the income, the cost of repairing premises, and spending to establish or defend title to an asset. Section 20 is not limited to companies: an individual running an income-producing rental activity can deduct qualifying expenses incurred wholly and exclusively for it, subject to the Act's restrictions. Routine repairs and attributable management fees may qualify; capital improvements, private spending and loan principal are not ordinary expense deductions, and interest has its own conditions, so confirm the treatment with your adviser. Law firm commentary on the new Act, such as DLA Piper's summary, describes maintenance and repairs, management fees, interest on loans taken for the property, and other expenses wholly and exclusively incurred in earning the rent as deductible.

One point is often misreported. Section 30 of the Act lets an individual deduct interest on a loan for developing an owner-occupied residential house. That is the home you live in, not your rental property. Interest on a loan for a property you let out falls under the general rule above, not this one.

The common thread is evidence. Section 32 lets the tax authority ask for documents supporting a deduction claim. An expense with no receipt is an expense you may not be able to claim.

• Repairs and maintenance on the let property
• Agency and management fees paid to your agent
• Interest on a loan taken to acquire or develop the let property, subject to your adviser's view
• Legal costs of establishing or defending title
• Not deductible: your own living costs, or capital improvements treated as repairs

Withholding tax on rent

Withholding tax is not a separate tax. It is part of your income tax collected early by the tenant, who deducts it from the rent and pays it to the tax authority. Section 51 of the Nigeria Tax Administration Act requires the payer to deduct at the rate set in the deduction at source regulations.

The current rate on rent, hire or lease is 10%, for both corporate and individual landlords, according to PwC's Worldwide Tax Summaries (last reviewed May 2026). So when a company rents your property for N10,000,000 a year, it pays you N9,000,000 and remits N1,000,000 to the tax authority in your name. The 2024 regulations require the deducting tenant to give you a receipt, which serves as your credit note.

Who has to deduct is narrower than many landlords think. Under the Deduction of Tax at Source (Withholding) Regulations 2024, the duty falls on bodies corporate and unincorporated bodies, other than individuals, so a private individual renting a home is generally not a withholding agent. A business tenant should check its own status. There is also a conditional exemption where the landlord has a valid Tax ID and the tenant's transactions with them in the month total N2,000,000 or less. Smallness alone is not enough.

For a resident landlord, the tax withheld is an advance payment you set off against your annual bill. If you do not claim it, you pay twice. For a non-resident landlord, section 51(2) makes the tax withheld on rent the final tax on that income. Note also that a landlord without a tax identification number can be charged at twice the normal rate under the 2024 regulations.

Managers and agencies should know the other side of this. A tenant that is required to deduct and fails to faces an administrative penalty of 40% of the tax not deducted under section 105 of the Administration Act. Section 107 requires deducted tax to be remitted by the 21st of the following month, with a penalty and interest for failure. Official guidance is not consistent here: the 2024 Regulations give state remittances until the 30th of the following month, and the JRB's 2026 guidelines say the last day of that month. Until that is clarified, remitting by the 21st is the safe course.

• Company tenant, resident individual landlord: 10% deducted and remitted, claimed as a credit on your return
• Company tenant, landlord living abroad: 10% deducted, and that is the final tax on the rent
• Company tenant, company landlord: 10% deducted, set off against the landlord company's tax
• Individual renting a home from an individual: deduction generally not required, so you declare the full rent
• Landlord with no TIN: deduction may be at twice the normal rate
• In every case where tax is deducted, keep the tenant's withholding receipt

The records to keep, and for how long

Section 31 of the Nigeria Tax Administration Act requires every person, whether or not they are liable to pay tax, to keep books or records with enough information to work out their tax liability. Records must be in English and kept for at least six years after the year of assessment the income relates to. Under section 102, failing to keep records, or failing to produce them when asked, carries an administrative penalty of N10,000 for an individual and N50,000 for a company.

Six years is longer than most landlords keep anything. Rent received in 2026 belongs to the 2027 year of assessment, so those records should be kept until at least the end of 2033.

Your tenants now need records too. The Act gives tenants a rent relief of 20% of annual rent paid, capped at N500,000, provided they accurately declare the rent paid and other information the tax authority prescribes. Expect tenants and their employers to ask for a receipt, a tenancy agreement and your details. A landlord who already issues proper receipts loses nothing here. One who does not will be asked, repeatedly, and the tenant's declaration of rent paid will sit on the tax authority's records next to your own return.

Filing, paying, and what happens if you do not

Individuals file once a year, by 31 March, as the JRB's 2026 guidelines state, and section 13 of the Administration Act requires an annual return even where no tax is payable. The return covers income for the year before the year of assessment. Rent you receive in 2026 therefore goes on the return due by 31 March 2027. Section 49 of the Administration Act requires any tax due to be paid on or before the filing date.

In Lagos, returns are filed through the LIRS eTax platform, which LIRS describes as the only approved channel. The deadline can move: in 2026 LIRS extended its 31 March deadline to 14 April and then to 21 April, after traffic on the platform surged. Plan for 31 March and treat any extension as a bonus.

The penalties are set out in the Administration Act. Failing to file, or knowingly filing an incomplete or inaccurate return, carries an administrative penalty of N100,000 for the first month and N50,000 for each month the failure continues (section 101). Tax paid late attracts an extra 10% of the amount due, plus interest at the Central Bank of Nigeria's monetary policy rate plus a spread set by the Minister (section 65).

Enforcement is also getting sharper. In January 2026, LIRS announced it had activated its power of substitution under section 60 of the Administration Act, which allows it to direct anyone holding money for, or owing money to, a taxpayer with an unpaid final liability to pay that money to LIRS instead. For a landlord, a bank account or a tenant could be on the receiving end of that direction.

• Register for a tax identification number if you do not have one
• Total the rent received in the year, by property, and note the period each payment covers
• Total your deductible expenses, with receipts
• Add any withholding tax credit notes from company tenants
• Add your other income and file through your state's portal by 31 March
• Pay any balance by the same date, and keep everything for six years

How Ledge keeps the records your tax return needs

Ledge does not file your tax return, and it is not a substitute for an adviser. What it does is keep the records a return depends on, as the year happens, so the March deadline becomes a matter of reading totals rather than reconstructing them from bank alerts.

Every payment in Ledge is recorded against a tenant, a property and a specific period, and the receipt is issued from that record, numbered in one sequence across your portfolio. That answers the advance rent question before your adviser asks it: what was received, when, and which months it covers. Part payments are marked as part payments rather than looking like a full year's rent.

Expenses are logged against the property they relate to, so repair and maintenance spending sits next to the rent it was spent earning. For agencies managing on behalf of landlords, owner statements show gross rent collected, commission, expenses and the net remitted, which is close to the figure each landlord needs for their own return. Owner statements and management fees are part of the Agency plan.

• Every payment tied to a tenant, property and period
• Numbered receipts issued automatically, stating the period covered
• A running rent ledger per tenancy, exportable when you need it
• Expense tracking tied to the right property
• Owner statements showing gross, commission, expenses and net, on the Agency plan
• Tenancy agreements, notices and receipts stored with the tenancy