Maximize Tax Deductions Real Estate Investments Nigeria 2026 Mortgage Maintenance Depreciation Solar
With the Finance Act 2025 amendments (effective 2026 tax year) and ongoing advocacy by mortgage lenders, real estate investors can now claim significantly more deductions in 2026. Many still leave ₦1M–₦10M+ on the table annually due to poor record-keeping, lack of awareness or incorrect filing.
The biggest opportunities lie in mortgage interest (increased cap), property maintenance/repairs, depreciation/capital allowances on commercial buildings, and enhanced reliefs for green/solar installations.
1. Mortgage Interest Deduction (Individuals & Companies) Individuals can deduct interest paid on loans used to acquire owner-occupied residential property.
- 2026 cap (individuals): Up to ₦7.5 million per annum (increased from previous limits under PITA).
- Companies can claim full interest as a business expense under CITA (no cap).
- Example: ₦120M mortgage at 18% interest → annual interest ~₦21.6M. Individual claims ₦7.5M deduction → tax savings of ₦2.25M–₦3M (depending on tax bracket). Company claims full ₦21.6M → savings ~₦6.48M (30% CIT).
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, minor structural fixes
- Not allowable: Major capital improvements (these qualify for capital allowances)
- 2026 tip: Keep invoices, photos & separate ledger. Average annual claim on a ₦40M rental property: ₦1M–₦2.5M → tax savings ₦300k–₦750k.
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: ₦300M commercial building → Year 1 allowance ₦30M → tax savings ₦9M (30% CIT). Over 10 years total relief can exceed ₦90M.
4. Green & Solar Installation Reliefs Solar PV systems, inverters, batteries and energy-efficient upgrades qualify for enhanced capital allowances and possible investment tax credits.
- Capital allowance: Up to 90% initial allowance on qualifying renewable equipment
- VAT exemption: Still applies on solar panels, inverters & related components
- Example: ₦15M solar system on a ₦200M commercial property → Year 1 allowance ₦13.5M → tax savings ₦4.05M (30% CIT). Plus monthly electricity bill savings of ₦400k–₦700k.
Documentation Requirements (FIRS 2026 Rules)
- Keep original receipts/invoices with clear description & supplier details
- Maintain a dedicated property expense ledger (Excel or accounting software)
- For green/solar: NGBC/certified installer report + photos before/after
- For mortgage interest: Bank statement showing interest paid + loan agreement
- Submit with annual tax return: March 31 for individuals (self-assessment); 6 months after year-end for companies
Real 2025–2026 Investor Examples
- Investor A (Lagos): ₦65M rental property + ₦10M solar retrofit → claimed ₦4.2M maintenance + ₦9M green allowance → saved ₦4M in tax.
- Investor B (Abuja): ₦180M commercial building → claimed ₦18M initial allowance + ₦3.2M repairs → saved ₦6.36M.
- Investor C (diaspora): ₦100M mortgage → claimed ₦7.5M interest deduction → saved ₦2.25M.
Final Thoughts
In 2026, tax deductions are one of the most powerful (and under-utilized) tools for boosting real estate returns.
By claiming mortgage interest (now up to ₦7.5M), maintenance, depreciation and especially green/solar reliefs, disciplined investors are adding millions to their after-tax bottom line every year.
The key is meticulous record-keeping and early planning. Start building your deduction file today — it will pay off significantly at tax time.
Which deduction are you planning to maximize in 2026? Mortgage interest, solar, or maintenance? Share your strategy 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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