09/07/2025
🔑 Key Highlights of the New Tax Laws Affecting Real Estate
✅ Tax Exemptions for Real Estate Investment Companies (REICs)
• Dividends and rental income received by REICs on behalf of shareholders are now tax-exempt, provided that:
o At least 75% of the income is distributed within 12 months after the fiscal year it was earned.
• This move encourages investment in property funds and enhances liquidity in the real estate market.
🛠 Inclusion of Real Estate Operational Costs
• Business profits/losses now factor in:
o Rent and surcharges from income-producing land
o Repairs, renovations, and machinery upgrades tied to income-generating property
• This will help real estate operators deduct more legitimate expenses from their taxable income.
📈 Changes in Corporate and Individual Taxation
💼 Corporate Income Tax Threshold Raised
• The exemption threshold for Corporate Income Tax (CIT) is increased from ₦25 million to ₦50 million in turnover.
• This provides relief for small real estate businesses, many of whom fall within this bracket.
🏗 4% Development Levy Introduced
• A new 4% development levy is added to fund educational and infrastructural projects.
• While this adds a cost layer, it's designed to boost infrastructure—which is vital for property value appreciation.
🧾 New Rent Relief Provisions for Individuals
• Individuals can deduct:
o ₦200,000 or 20% of annual rent paid (whichever is lower) from their taxable income.
o This is available only if they accurately declare their rent payments.
• This measure aims to ease the housing cost burden on tenants.
🏗 Withholding Tax Adjustments for Contractors
• For Nigerian resident contractors: WHT reduced from 2.5% to 2%.
• For non-resident contractors: WHT increased to 5%.
• This is designed to encourage local participation in construction and infrastructure development.
💬 Stakeholder Concerns and Recommendations
• While these reforms bring positive changes, stakeholders stress the need to:
o Reduce import costs of building materials
o Provide policy consistency and financing support
o Ensure proper implementation and compliance monitoring
