The Federal Inland Revenue Service (FIRS) has issued a clear clarification on stamp duty applicable to rent and tenancy agreements. Contrary to widely circulated claims that tenants must pay 6% stamp duty, the correct rate for most residential tenancies is 0.78%.
This clarification is important for both tenants and landlords to avoid overpayment or disputes.
Correct Stamp Duty Rates on Rent Agreements
According to FIRS and the Stamp Duties Act, the applicable rates depend on the duration of the tenancy:
| Tenancy Duration | Stamp Duty Rate | Example on ₦1,000,000 Rent |
|---|---|---|
| Less than 7 years | 0.78% | ₦7,800 |
| 7 years to 21 years | 3% | ₦30,000 |
| Above 21 years | 6% | ₦60,000 |
Since the vast majority of residential tenancies in Nigeria are for 1 year (or less than 7 years), 0.78% is the rate that applies to most tenants.
When is Stamp Duty Required?
- Stamp duty is payable when a new tenancy or lease agreement is executed.
- If a fresh agreement is prepared at renewal, the new document should also be stamped.
- If the renewal is simply a continuation under the existing agreement (no new document is created), additional stamping is generally not required.
Practical Implications for Tenants and Landlords
For Tenants
- Do not accept demands for 6% stamp duty on a standard 1-year residential tenancy.
- Request a proper breakdown and evidence of the applicable rate.
- Ensure the agreement is correctly stamped to avoid future legal issues.
For Landlords and Agents
- Applying the wrong rate can lead to disputes and loss of trust.
- Ensure tenancy agreements are properly stamped at the correct rate.
- Keep proper records of stamped documents.
Other Related Stamp Duties (For Context)
- Certificate of Occupancy: Flat rate (commonly ₦1,000 in many cases)
- Power of Attorney (land-related): 1.5%
- Sales Agreement: 1.5%
- Appraisement/Valuation of Property: 1.5%
What You Should Do Going Forward
- Confirm the duration of your tenancy agreement.
- Calculate stamp duty using the correct rate (most will fall under 0.78%).
- Ensure the agreement is stamped at an authorised point.
- Keep copies of the stamped agreement and payment evidence.
- Challenge any agent or landlord demanding the incorrect 6% rate on short-term residential tenancies.
Final Thoughts
The FIRS clarification brings much-needed clarity to a frequently misunderstood aspect of renting in Nigeria. Correct application of the 0.78% rate for most tenancies will help reduce unnecessary costs and disputes between tenants and landlords.
Both parties should insist on transparency and proper documentation. When in doubt, refer to the official FIRS position or consult a qualified tax professional or property lawyer.
Have you previously been charged the wrong stamp duty rate on your rent agreement? Share your experience in the comments.
Join Over 11,000 Real Estate Enthusiasts! Stay ahead with our quick 5-minute roundup of Nigerian and global real estate updates, delivered to your inbox every weekday. Don’t miss out on insider tips, market trends, and exclusive insights!
