INCOME TAX BILL 2025: KEY CHANGES IN HOUSE PROPERTY LOSSES AND CAPITAL GAINS EXEMPTION

The Income Tax Bill 2025 has introduced significant changes to house property losses and capital gains exemption. Here are the key takeaways:

- *House Property Losses*: If you incur a loss from one house property, you can now carry it forward and offset it against income from another house property. If there's still a loss after offsetting, you can offset it against other incomes, but only up to ₹2 lakh annually. Any excess above ₹2 lakh cannot be offset against other incomes in the same year.

- *Carry Forward Losses*: The balance loss, also known as an unabsorbed loss, can be carried forward for eight years. However, in later years, it can only be utilized against house property income, not against salary, business, or other sources of income.

- *Capital Gains Exemption*: The bill has also made changes to capital gains exemption. If you sell a property and buy a new one within one year, or build a new one within three years, the capital gains from the sale of the existing property will be tax-free.

The Income Tax Bill 2025 has introduced significant changes to house property losses and capital gains exemption in Nigeria. Here are the key takeaways:

- *House Property Losses*: If you incur a loss from one house property, you can now carry it forward and offset it against income from another house property. If there's still a loss after offsetting, you can offset it against other incomes, but only up to ₦2 lakh annually.¹

- *Carry Forward Losses*: The balance loss can be carried forward for eight years. However, in later years, it can only be utilized against house property income, not against salary, business, or other sources of income.

- *Capital Gains Exemption*: If you sell a property and buy a new one within one year, or build a new one within three years, the capital gains from the sale of the existing property will be tax-free.

Additionally, the Nigeria Tax Bill has introduced other changes, including:

- *Adjusted Tax Band*: A new tax band and progressive rate, where higher income is taxed at higher rates, while low income is exempted or taxed at lower rates.²

- *Exemption Threshold for PIT*: Employees earning a taxable income of ₦800,000 annually are exempt from PAYE tax.

- *Rent Relief*: An employee can claim a rent relief allowance of ₦200,000 or 20% of annual rent paid, whichever is lower.

These changes aim to simplify the tax system, promote economic growth, and provide relief to low-income earners.

Additionally, the bill has introduced changes to capital gains tax rates. The basic rate taxpayer will now be taxed at 18%, while the higher rate taxpayer will be taxed at 24%.