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The short answer
When you declare Nigerian rent on a return abroad, you can usually deduct the running costs of letting it: agent and management fees, repairs that restore rather than improve, insurance, property taxes such as Lagos Land Use Charge, service charges, legal fees for short lets and accountancy. Improvements are capital, not expenses. Loan interest is treated differently by country: UK individuals cannot deduct it as an expense, while the US and Canada allow it.
Nigerian rent is often quoted gross, but a lot leaves before the landlord sees it: agency fees, caretakers, repairs after a tenant leaves, Land Use Charge, and sometimes 10% withholding tax when the tenant is a company. Getting the deductions right can cut the tax abroad considerably. For how to report the income itself, see declaring Nigerian rental income abroad.
The general test
Each country uses a version of the same idea: the cost must be incurred to earn the rent and must be a running cost, not a capital improvement. Nigeria's own test, in section 20 of the Nigeria Tax Act 2025, allows expenses "wholly and exclusively incurred in the production of the income", and section 21 disallows capital expenditure and private or domestic spending. Abroad, the wording differs but the result is similar.
Common Nigerian costs and how they are usually treated
| Cost | UK | US | Canada |
|---|---|---|---|
| Agent's letting or collection fee | Allowable | Deductible (commissions, management fees) | Deductible (management and administration fees) |
| Caretaker or cleaner | Allowable (cleaning) | Deductible | Deductible if for the rental |
| Repairs that restore (repainting, fixing a leaking roof) | Allowable | Deductible | Current expense |
| Improvements (new extension, upgrading finishes) | Not allowable | Capitalise, then depreciate | Capital; claim CCA |
| Land Use Charge or tenement rates | Usually allowable (GOV.UK lists Council Tax) | Deductible (taxes) | Deductible (property taxes) |
| Service charge or estate dues | Allowable | Deductible | Usually deductible |
| Insurance | Allowable | Deductible | Deductible |
| Mortgage interest | Not deductible as an expense for individuals | Deductible | Deductible |
| Your own labour | Not allowable | Not deductible | Not deductible |
Sources: GOV.UK renting out a property (paying tax); IRS Publication 527; CRA guide T4036. Your country's guide decides borderline cases.
United Kingdom
GOV.UK lists allowable expenses including letting agents' fees, legal fees for lets of a year or less, accountants' fees, insurance, repairs and maintenance (not improvements), utilities, rent, ground rent and service charges, council tax, cleaning and gardening, and advertising. Replacement of furniture such as beds, sofas and fridges can qualify for replacement domestic items relief. Individuals cannot claim loan interest as an expense; the UK gives separate finance cost relief, which LITRG notes is lost on overseas lettings in a year you claim the new foreign income and gains regime. Overseas rent goes on the SA106 foreign pages, with foreign tax shown separately.
United States
IRS Publication 527 lists common rental expenses: advertising, cleaning and maintenance, commissions, depreciation, insurance, legal and professional fees, management fees, mortgage interest, repairs, taxes and utilities. Improvements must be capitalised and recovered through depreciation; land is never depreciable. Pub 527's alternative depreciation system (ADS) table gives 30 years for residential rental property placed in service after 2017, and guidance for foreign rentals says ADS generally applies to residential property abroad (Taxes for Expats, April 2026). That is slower than the 27.5 years used for US property, so check with your preparer.
Canada
CRA guide T4036 allows management and administration fees, including amounts paid to agents to collect rent or find tenants, property taxes, repairs and maintenance (but not the value of your own labour), insurance and interest. Repairs that restore are current expenses; improvements that go beyond the original condition are capital. Buildings are generally Class 1 for capital cost allowance at 4%, with only half the allowance in the year of purchase, and CCA cannot create or increase a rental loss. Keep records for six years.
Worked example
Example only, for a UK resident landlord. A Lagos flat earns ₦6,000,000 rent in the tax year. Costs: agent fee ₦600,000, repairs between tenants ₦400,000, Land Use Charge ₦150,000, and a kitchen upgrade ₦2,000,000.
| Item | Naira |
|---|---|
| Rent | ₦6,000,000 |
| Less agent fee | ₦600,000 |
| Less repairs | ₦400,000 |
| Less Land Use Charge | ₦150,000 |
| Kitchen upgrade (capital, not deducted) | ₦0 |
| Taxable rental profit before conversion | ₦4,850,000 |
Each item is then converted into sterling on a consistent basis (see which exchange rate to use). Had the kitchen upgrade been deducted, the profit would have been understated by ₦2,000,000.
Withholding tax is not an expense
If a corporate tenant deducts 10% withholding tax from your rent, do not treat it as a cost. Declare the gross rent and claim the Nigerian tax as a foreign tax credit, if your country allows it. See corporate tenant deducting WHT.
Records that hold up
- Receipts or invoices for every cost, with dates and the property address.
- Agent statements showing rent collected and fees taken.
- Land Use Charge demand notices and payment evidence.
- Before-and-after photos for repairs, which help show restoration rather than improvement.
Where Pryme fits
Paying the caretaker, the agent and the Land Use Charge from one naira balance gives you a single dated trail. A Pryme account holds naira next to your home currency, Send pays Nigerian accounts, and any customer can produce a verifiable receipt for each payment (receipts).
Questions people ask
Can I deduct the agent's fee on my Lagos flat from UK tax?
Yes. GOV.UK lists letting agents' fees as an allowable expense for rental income, and that applies to overseas property reported on SA106.
Is Land Use Charge deductible against rental income abroad?
It is a property tax on the let property, which the UK, US and Canadian guides treat as a deductible cost of letting.
Can I deduct renovation costs on my Nigerian property?
Not as an expense. Improvements are capital: the US recovers them through depreciation and Canada through capital cost allowance. In the UK they are not an allowable letting expense.
Can UK landlords deduct mortgage interest on Nigerian property?
Not as an expense. Individuals get finance cost relief instead, which is lost in a year you claim the foreign income and gains regime.
Sources
- GOV.UK: Renting out a property, paying tax · accessed Oct 2026
- IRS Publication 527: Residential rental property · accessed Oct 2026
- CRA T4036: Rental income · accessed Oct 2026
- LITRG: Foreign income and gains regime, tax years 2025/26 onwards · accessed Oct 2026
- Taxes for Expats: Information you need about foreign rental properties · accessed Oct 2026
- Nigeria Tax Act 2025 (gazette text) · 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.