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The short answer
Nigeria's Withholding Regulations 2024 set withholding tax on rent at 10%, deducted by a company or other non-individual tenant before paying you. On a US return you report the gross rent, before the deduction, and the 10% withheld can count as foreign income tax paid for the foreign tax credit, usually on Form 1116, up to the US tax on that income.
Who deducts the 10% and when
Under the Deduction of Tax at Source (Withholding) Regulations 2024, which took effect on 1 July 2024, the rate on rent is 10% for every category of recipient: resident or non-resident, company or individual (PwC Nigeria summary). The deduction is made by the person paying the rent, and the Regulations put that duty on companies, government bodies and other non-individuals. An individual tenant paying you directly does not deduct it, according to the Udo Udoma & Belo-Osagie review of the Regulations.
So whether you see withholding at all depends on your tenant. If a company, a bank, an NGO or a government agency rents your Lagos flat or Abuja office, expect 10% to come off the rent. If a family rents it, the full rent usually reaches you, and any Nigerian tax due is then a matter of your own Nigerian filing. The NiDCOM-hosted NGEX diaspora guide describes the 10% rent withholding as applying regardless of where the landlord lives.
The receipt is the evidence
The Regulations require the person who deducts to give you a receipt showing the gross amount and the tax deducted. Without that receipt or a credit note you have weak evidence that tax was paid, in Nigeria or in the US. Ask the tenant for it every time, and keep it with the tenancy agreement. Whether the 10% is a final tax for a non-resident individual landlord under the Nigeria Tax Act 2025 is not settled in the sources we opened, so check that with a Nigerian adviser before assuming nothing more is owed in Nigeria.
How the US side works
As a US citizen or resident, your Nigerian rent is part of your worldwide income. You report the gross rent on Schedule E, not the net amount that landed in your account, because the tax withheld was paid on your behalf. Then you claim the withheld tax as a credit. The full Schedule E picture, including depreciation, is in how US tax on Nigerian rental income works.
The IRS foreign tax credit covers foreign income taxes, war profits taxes, excess profits taxes and taxes in lieu of income taxes. Nigerian withholding on rent is a tax on income, so it is the kind of tax the credit is designed for. The IRS also warns that the amount withheld is not always the amount that qualifies: if you could have reduced the foreign tax, or are entitled to a refund, only the tax you are actually liable for counts. There is no US-Nigeria tax treaty, so the credit comes from US domestic law alone.
The limit that catches most landlords
The credit cannot exceed the US tax on your foreign-source income. The IRS formula is your US tax multiplied by foreign-source taxable income over total taxable income. Nigerian withholding is charged on gross rent, while US tax falls on net rent after expenses and depreciation, so the Nigerian tax is often larger than the US tax on the same rent. The excess is not lost: unused credit can be carried back one year and forward ten years.
A worked example
Example only. The exchange rate and the US tax rate are invented for the arithmetic. Amaka lives in Houston and lets a Lekki flat to a company for ₦6,000,000 a year. The company deducts 10% (₦600,000) and pays her ₦5,400,000. At an example rate of ₦1,500 to US$1:
| Item | Naira | US$ |
|---|---|---|
| Gross rent reported on Schedule E | 6,000,000 | 4,000 |
| Nigerian tax withheld | 600,000 | 400 |
| Expenses and depreciation (example) | 3,750,000 | 2,500 |
| Net rental income | 2,250,000 | 1,500 |
| US tax on that net income at an example 22% | 330 | |
| Foreign tax credit allowed this year (limit) | 330 | |
| Unused credit to carry back or forward | 70 |
Check: 400 minus 330 is 70. The real limit uses the whole return, not one line, so Form 1116 may give a different figure; the point is that the credit stops at the US tax on the foreign income.
Converting the withholding into dollars
All amounts on a US return are in dollars. The IRS has no official exchange rate and generally expects the rate prevailing when the item was received or paid; for the tax, that is when it was withheld. The IRS yearly average table has no naira row, so use a published source such as the Central Bank of Nigeria rates and stay consistent. See which rate to use for naira.
What to check first
- Is your tenant a company or other body that must deduct? If not, there may be no withholding to claim.
- Do you have a withholding receipt or credit note for each payment, showing gross rent and tax?
- Have you reported the gross rent, not the net, on Schedule E?
- Have you converted both the rent and the tax at a documented rate for the date of each payment?
- Is the credit limited this year, and have you recorded the carryover? Our Form 1116 walk-through shows the lines.
Where Pryme fits
Rent paid into one naira account in your name gives a clean record to match against each withholding receipt. A Pryme account can be opened from the US with naira account details, and you can generate a verifiable statement through VerifyDoc.ai for your preparer (receipts and statements). The Nigeria-side rules are summarised in withholding tax in Nigeria under the 2025 laws.
Questions people ask
Can I claim Nigerian withholding tax on rent against my US tax?
Generally yes, as a foreign tax credit on Form 1116, because it is a tax on income. The credit is limited to the US tax on your foreign-source income, and unused amounts carry back one year and forward ten.
Do I report the rent before or after the 10% deduction?
Before. Report the gross rent on Schedule E and claim the withheld tax as a credit, converted to dollars at the rate for the date it was withheld.
My tenant is a family, not a company. Is there withholding?
Usually not. The 2024 Regulations put the duty to deduct on companies and other non-individuals, not on individual tenants.
Is the 10% rent withholding a final tax for a landlord living in the US?
The sources we checked do not settle this under the Nigeria Tax Act 2025. Ask a Nigerian tax adviser before assuming no Nigerian return is needed.
Sources
- PwC Nigeria: Highlights of the Deduction of Tax at Source (Withholding) Regulations 2024 · accessed Oct 2026
- Mondaq (Udo Udoma & Belo-Osagie): Overview of the Nigerian withholding tax regulations of 2024 · accessed Oct 2026
- NiDCOM: NGEX Diaspora Guide to the Nigeria Tax Reforms 2026 · accessed Oct 2026
- IRS: Foreign tax credit (reviewed 9 Jul 2026) · accessed Oct 2026
- IRS: Foreign tax credit, how to figure the credit (reviewed 9 Jul 2026) · accessed Oct 2026
- IRS: Foreign currency and currency exchange rates (reviewed 22 May 2026) · accessed Oct 2026
This article is general information, not financial, legal or tax advice. Products described are provided under the terms on this site and are subject to regulation and eligibility.