If you pay rent in Nigeria, there's a new tax benefit you need to know about. The Nigeria Tax Act 2025 introduced rent relief—a deduction that could reduce your taxable income by up to ₦500,000. That translates to real savings of ₦90,000 or more in actual taxes.

Yet most Nigerians don't even know this deduction exists. In this comprehensive guide, we'll explain exactly what rent relief is, who qualifies, and how to claim it on your 2026 tax return.

What is Rent Relief?

Rent relief is a new tax deduction introduced under the Nigeria Tax Act 2025, effective January 1, 2026. It allows taxpayers who pay rent for their primary residence to reduce their taxable income.

The formula is simple:

Rent Relief = 20% of your annual rent, up to a maximum of ₦500,000

This means:

• If you pay ₦1 million in rent, you can deduct ₦200,000
• If you pay ₦2 million in rent, you can deduct ₦400,000
• If you pay ₦2.5 million or more, you can deduct the maximum ₦500,000

Real savings example: If you're in the 18% tax bracket and claim the full ₦500,000 relief, you'll save ₦90,000 in actual taxes. That's money back in your pocket.

Who Qualifies for Rent Relief?

Not everyone can claim rent relief. Here are the eligibility requirements:

You must:

• Be a Nigerian tax resident
• Pay rent for your primary residence
• Have documentation proving your rent payments
• Not live in employer-provided housing (where employer pays directly)
• Not own the property you live in

You can still qualify if:

• You receive housing allowance from your employer (as long as you pay the rent yourself)
• You share an apartment with others (claim your portion of the rent)
• You moved during the year (claim rent for all properties)

Important clarification: If your employer gives you a housing allowance and you use it to pay rent, you CAN claim rent relief. However, if your employer pays your landlord directly, you CANNOT claim this deduction.

How to Calculate Your Rent Relief

Calculating rent relief is straightforward. Here's the formula:

1. Add up all the rent you paid during the tax year
2. Multiply by 20%
3. If the result exceeds ₦500,000, cap it at ₦500,000

Documentation You'll Need

To claim rent relief, you must keep proper records. FIRS may request the following:

1. Tenancy Agreement: A valid, signed agreement between you and your landlord showing the rent amount and duration
2. Rent Receipts: Official receipts for each payment made
3. Bank Statements: Showing rent transfers to your landlord's account
4. Landlord's Information: Name, address, and ideally TIN (Tax Identification Number)

Keep records for 6 years: FIRS can audit your tax returns up to 6 years back. Store all documentation safely in both physical and digital formats.

Digital records are acceptable. Take photos of receipts, scan your tenancy agreement, and save bank statements as PDFs. Store them in a dedicated folder on your cloud storage.

How to Claim Rent Relief

Claiming rent relief is part of your annual tax filing process. Here's how:

1. Track your rent payments throughout the year - Use KeepAm or a spreadsheet to record each payment
2. Calculate your total annual rent - Add up all payments made during the tax year
3. Apply the 20% formula - Calculate your relief amount (capped at ₦500,000)
4. Include in your tax return - Report the deduction when filing with FIRS
5. Keep documentation ready - In case of audit, you'll need to prove your claim

Pro tip: KeepAm automatically tracks your rent payments and calculates your relief. When tax season arrives, everything is already organized.

Common Mistakes to Avoid

Don't make these errors when claiming rent relief:

❌ Mistake 1: Not keeping receipts
Without proper documentation, your claim can be rejected during an audit.

❌ Mistake 2: Claiming without paying tax
Rent relief reduces taxable income, but you must have taxable income first.

❌ Mistake 3: Double claiming
If your employer provides housing, you cannot claim rent relief for that property.

❌ Mistake 4: Forgetting to claim
Many Nigerians simply forget to include rent relief. Don't leave money on the table!

❌ Mistake 5: Claiming more than you paid
Only claim what you actually paid. Inflating figures is tax fraud.

The Bottom Line

Rent relief is one of the most valuable new tax benefits for Nigerian renters. If you pay rent for your home, you should absolutely be claiming this deduction. With potential savings of up to ₦90,000 or more per year, it's too significant to ignore.

Start tracking your rent payments today, keep your documentation organized, and make sure to claim rent relief when you file your 2026 taxes.

Ready to get started?

• Use our calculator to see your potential tax savings
• Create a free account to start tracking rent payments
• Read our complete 2026 tax guide