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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