If you’re planning to buy, sell, or invest in property in Nigeria, brace yourself.
The Nigeria Tax Act 2025, signed into law in June and taking effect on January 1, 2026, is about to change some things about property transactions.
I spent the last week reviewing the new Tax Act (over 200 pages) with the consultation and guidance of our in-house property lawyers at RHS.
In this article, you will learn everything that connects real estate and the new tax reform.
Let’s start with the most asked-about part:
1. Capital Gains Tax (CGT): The Big Picture
Capital Gains Tax hasn’t disappeared. It’s been folded into the unified Nigeria Tax Act.
When you sell property for more than you paid, the profit (capital gain) is taxable.
Here’s the structure:
- For Companies: 30% flat rate on all capital gains
- For Individuals: Progressive rates based on total income.
Illustrative example:
A company Vendor sells a property at N100 million and acquired it at N60 million.
Under the old 10 % CGT regime:
CGT = N4 million
Net proceeds = N96 million.
Under the new 30 % CGT regime:
CGT = N12 million
Net proceeds = N88 million.
The seller also gets N8 million less, which is the price of the goods discounted by 8.33% of the net proceeds, i.e., the increased CGT.
You can see that this has a direct effect on the pricing in the market and the readiness of investors to pay.
Meanwhile, your principal private residence is exempt from CGT, but only once in your lifetime.
What qualifies for this exemption?
- A dwelling house (or part of one) where you actually live
- Land adjoining the house, up to a maximum of one acre
- The land cannot be used for commercial purposes
But note that you only get this exemption once.
After that, every property sale is fair game for taxation. This means if you’re a young professional buying your first flat in Victoria Island, that one-time exemption is precious. So, use it wisely.
Smaller Exemptions That Matter
- Personal chattels: If you sell furniture, artwork, or other movable property with the house, you won’t pay CGT if the total consideration doesn’t exceed N5 million or three times the annual minimum wage (whichever is higher).
- Motor vehicles: Up to two vehicles used solely for private purposes are exempt per year.
- Compensation payments: If you receive compensation for loss of employment, injury, or compulsory land acquisition, the first N50 million is tax-free. Anything above that is taxable.
Meanwhile, if the government forcibly acquires your land, you won’t pay Capital Gains Tax (Sec 37).
However, reclaiming full market value could be challenging if the acquisition occurs suddenly.
How CGT Is Calculated
The formula is straightforward:
Disposal Proceeds – (Acquisition Cost + Improvement Costs + Selling Expenses) = Chargeable Gain
However, if you used the property for business and claimed capital allowances (depreciation), things get more complex. You can only deduct the “residue” (what’s left after depreciation) from your disposal proceeds.
NOTE: For individuals, CGT is based on disposals made during the year before the tax year. If you sell property in 2026, you’ll report and pay tax in 2027.
2. Stamp Duty
Stamp duty is the tax on legal documents and in property transactions. It’s unavoidable.
The buyer typically pays this cost, and it must be paid before your deed of transfer is legally valid.
The Rates
For Property Sales (Conveyance on Sale):
- Standard rate: 1.5% of the property value
- Person liable: The buyer (transferee)
- Exemption: Properties valued at N10 million or less are exempt
For Leases:
- Lease duration up to 7 years: 0.78% of total rent value
- Lease duration above 7 years: 3% of total rent value
- Person liable: The tenant (lessee)
- Exemption: Annual rent below N10 million or 10 times the national minimum wage (whichever is higher)
3. VAT on Property
Value Added Tax remains at 7.5%, but the main point is understanding where it applies to property.
What’s Taxable?
Residential property sales are generally not subject to VAT.
Commercial property is a different story. If you’re selling office space, retail units, or industrial property, VAT applies.
Professional services: You’ll pay 7.5% VAT on:
- Real estate agent commissions
- Legal fees for conveyancing
- Property valuation and appraisal services
- Architectural and engineering services
- Surveying services
Meanwhile, commercial leases attract VAT.
If you’re renting out shop space or office buildings, you must charge 7.5% VAT on the rent and remit it monthly to the Federal Inland Revenue Service (FIRS).
Example Scenario
For example, say you hire a real estate agent who charges 5% commission on a N50 million property sale:
- Agent fee: N2.5 million
- VAT (7.5%): N187,500
- Total cost: N2,687,500
Legal fees for property transfers typically range from 1% to 2% of the property’s value.
So, on that same N50 million property:
- Legal fee (1.5%): N750,000
- VAT: N56,250
- Total: N806,250
Even beyond taxes, property transactions involve substantial costs, including survey and valuation, legal documentation, and the Governor’s Consent fee.
So now, the new normal is budgeting 8-12% of property value for all taxes and fees combined when buying property.
4. Transfer Between Family Members
The law treats gifts differently.
If you transfer property as a gift (no money changes hands), the recipient is deemed to have acquired it at the last arm’s length transaction value.
This can create unexpected tax consequences for the recipient when they eventually sell.
So, What Happens From 2026?
For transactions before January 1, 2026, old tax laws apply. But for transactions after January 1, 2026, the New Nigeria Tax Act applies.
If you’re mid-transaction when the law takes effect, consult a tax professional immediately.
The transition could significantly affect your tax liability.
Also, the government seems not to be playing around this time.
Penalties for late filing (a fine of N25,000 and an increase in the monthly tax) and tax evasion (a fine up to 300% of the tax evaded, plus possible criminal prosecution) are provided for in the law.
The Bottom Line is to Plan Ahead
In a nutshell, no new taxes were created in the 2025 tax reforms.
The new law simply consolidated existing ones and closed loopholes.
The rates are largely unchanged, but enforcement is expected to tighten dramatically.
Nigerians will keep buying, selling, and investing. But from January 2026, these things will be unavoidable.
Disclaimer: This guide is for informational purposes only and doesn’t constitute tax or legal advice. Consult qualified professionals for your specific situation.
