With the Finance Act 2025 amendments and ongoing CBN rate cuts, real estate investors can now claim more deductions in 2026 than ever before. Many still miss out on ₦1M–₦10M+ annual tax savings due to poor record-keeping or lack of awareness.
The key areas with the biggest potential savings are mortgage interest (for individuals and companies), property maintenance and repairs, capital allowances/depreciation on commercial buildings, and enhanced reliefs for green/solar installations.
1. Mortgage Interest Deduction Individuals can deduct mortgage interest paid on loans used to acquire residential property (up to a cap under PITA). Companies can claim full interest as a business expense under CITA.
- 2026 limit for individuals: Up to ₦5 million per year (increased from previous caps)
- Example: ₦80M mortgage at 18% interest → annual interest ~₦14.4M. Individual can claim up to ₦5M deduction → tax savings of ₦1.5M–₦2M (depending on tax bracket).
2. Property Maintenance & Repairs Both individuals and companies can deduct actual expenses for repairs and maintenance of investment properties.
- Allowable: Routine repairs, painting, plumbing, electrical fixes, minor structural work
- Not allowable: Major improvements or capital additions (these qualify for capital allowances)
- 2026 tip: Keep detailed invoices and photos. Average annual claim for a ₦30M rental property: ₦800k–₦2M → tax savings ₦240k–₦600k.
3. Depreciation / Capital Allowances on Commercial Buildings Companies can claim capital allowances on commercial properties (offices, shops, warehouses).
- Initial allowance: 10% in year 1
- Annual allowance: 2% per year thereafter (straight-line)
- Example: ₦200M commercial building → Year 1 allowance ₦20M → tax savings ₦6M (at 30% CIT). Over 10 years total relief can exceed ₦60M.
4. Green & Solar Installation Reliefs The biggest new opportunity in 2026. Solar PV systems, inverters, and energy-efficient upgrades qualify for enhanced capital allowances and possible investment tax credits under the green incentives framework.
- Capital allowance: Up to 90% initial allowance on solar/renewable equipment
- VAT exemption: Still applies on solar panels and related components
- Example: ₦12M solar system installed on a ₦150M commercial property → Year 1 allowance ₦10.8M → tax savings ₦3.24M (30% CIT). Plus monthly electricity bill savings of ₦300k–₦600k.
Documentation Requirements (FIRS 2026 Rules)
- Keep receipts/invoices with clear description
- Maintain a property expense ledger (Excel or accounting software)
- For green installations: NGBC or certified installer report + photos
- For mortgage interest: Bank statement showing interest paid + loan agreement
- Submit with annual tax return (self-assessment due March 31 for individuals, 6 months after year-end for companies)
Real 2025–2026 Investor Examples
- Investor A (Lagos): ₦45M rental property + ₦8M solar retrofit → claimed ₦3.2M maintenance + ₦7.2M green allowance → saved ₦3.1M in tax.
- Investor B (Abuja): ₦120M commercial building → claimed ₦12M initial allowance + ₦2.5M repairs → saved ₦4.35M.
- Investor C (diaspora): ₦65M mortgage → claimed ₦4.8M interest deduction → saved ₦1.44M.
Final Thoughts
In 2026, tax deductions are one of the most powerful (and under-used) tools for boosting real estate returns.
By claiming mortgage interest, maintenance costs, depreciation, and especially green/solar reliefs, many investors are quietly adding ₦1M–₦10M+ to their bottom line every year.
The key is meticulous record-keeping and early planning. Start building your deduction file today — it will pay off at tax time.
Which deduction are you planning to maximize in 2026? Mortgage interest, solar, or maintenance? Share below!
Disclaimer: This information is for general purposes only and not legal advice. Consult a qualified real estate lawyer for guidance.
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