REALWorld Law

How can investment in real estate by an individual/organization/company be set up?

The taxes applicable to real estate transfer transaction are: Capital Gains Tax (CGT), Stamp Duties. 

Capital gains realised on the sale of real property is subject to CGT and payable by the seller of real estate. Under the Nigeria Tax Act (NTA) 2025, CGT is no longer a flat 10% rate. For individuals, chargeable gains are added to total income and taxed at progressive personal income tax (PIT) rates (0% to 25%). For companies, gains are taxed at the applicable Companies Income Tax (CIT) rate: 0% for small companies and 30% for larger companies.¹

It is noteworthy that rollover relief which allowed businesses to defer CGT when profits from the disposal of business asset are reinvested into a replacement asset of the same class, is no longer available under the new Act. Stamp duty is chargeable either at fixed rates or ad valorem (ie in proportion to the value of the consideration) depending on the class of instrument, and under the law, the transferee (purchaser or assignee) is responsible for payment. For transactions involving corporate entities, the Nigeria Revenue Service (NRS) rate is typically 1.5%.  

In property transactions involving individuals and not corporate entities, stamp duty is paid to the Internal Revenue Service of the state where the property is located, and the rates vary within the 36 States in Nigeria. In Lagos State, the rates payable for Stamp Duties is currently 0.5%  of the property value.

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¹ Nigeria Tax Act defines a small company as a business that earns a gross turnover of ₦100,000,000 (One hundred million naira) or less per annum with a total fixed asset not exceeding ₦250,000,000 (two hundred and fifty million naira). Any company that does not qualify as a small company under the NTA is a large company.

Last modified 22 Apr 2026

How can investment in real estate by an individual/organization/company be set up?

VAT is not chargeable on the sale of real property, including buildings which are developments on land, and this is specifically excluded from the definition of goods subject to VAT payment.

Last modified 22 Apr 2026

How can investment in real estate by an individual/organization/company be set up?

A combination of land charges, such as ground rents, tenement rates, Neighbourhood Improvement Charges, Business Premises Charges apply to properties at different rates across Nigeria. The responsibility for these payments is on the owner and occupier of the premises and ought to be paid to Government before a transfer of the interests to the purchaser otherwise, it becomes the responsibility of the purchaser or assignee to make the payment on any outstanding charges after transfer.

The Land Use Act provides that the Governor of a State where a property is located shall give consent for a transfer of the interests in the property to be valid. The transactions in which Governor’s consent is needed include sale of land, mortgage, leaseetc. Payment of a consent fee may be made conditional on the granting of the consent or made antecedent of the grant. The rate chargeable as consent fee depends on the scale adopted in a particular state but is mostly between 3–5% of the consideration paid on the property transaction. Failure to pay consent fee will make the alienation of interest voidable.

The Registration Fee is required to be paid under the various land instrument registration laws of the States before documents are registered. The property sought to be registered may be valued or revaluated by the director of lands or other valuers to determine the amount payable, and not necessarily the amount stated by the parties in the document sought to be registered.

The purchaser is responsible for ensuring that all required costs and taxes for consent and registration of the transferred interests are paid.

The fees for the Solicitors and other professional consultants including estate surveyors and agents also arise in transfer of property transactions.

The purchaser is usually responsible for the payment of the transaction costs and the taxes except where expressly agreed by the parties that the costs and taxes are to be shared by the parties.

Last modified 22 Apr 2026

How can investment in real estate by an individual/organization/company be set up?

The recurring taxes outside the transfer costs that are payable by an owner of real estate are the annual charges for land use which includes ground rents, tenement rates and such other levies for development and business premises which the government authorities impose on owners and occupiers of real property. The rates are uniformly imposed on properties depending on locations and the nature of the building developments.

The Taxes and Levies (Approved List for Collection) Act 1998 provides for state governments to charge and collect business premises registration fee and development levy, annually from property owners. Rental income is taxable as part of the owner’s total income. Companies are taxed at the applicable Companies Income Tax (CIT) rate (0% for qualifying small companies or 30% for larger companies). Individuals are taxed at progressive personal income tax (PIT) rates (0% on the first ₦800,000 of total income, rising to 25% on income above ₦50 million).

Withholding tax (WHT) at 10% also applies to rental payments made by corporate tenants, government agencies, and other prescribed payers. The tenant must deduct the WHT at source and remit it to the relevant tax authority. The landlord can claim the deducted WHT as a credit against their final income tax liability. We note that withholding tax is not charged on rental income or dividends due to a real estate investment company.

Last modified 22 Apr 2026

How can investment in real estate by an individual/organization/company be set up?

Professional fees of solicitors, property managers, estate agents and such other consultants engaged by the owner of real estate are payable by the owner. The owner is also responsible for maintenance of external structures and parts of the building.

Where the owner is the sole occupier of the property, the costs for services and utilities consumed in the property are payable by the owner. Also, the building insurance costs are the responsibility of the owner.

Last modified 22 Apr 2026

How can investment in real estate by an individual/organization/company be set up?

The most common income from ownership of real estate are rental payments made by tenants, lessees and licensees of the property and capital gains or profits arising from the sale of the property.

The owner of property will also derive income from the business operations conducted within the premises whether providing hotel, hospitality, leisure, recreational and such facilities that permit users to pay a fee.

Last modified 22 Apr 2026

How can investment in real estate by an individual/organization/company be set up?

The income from real estate is subject to the applicable tax laws and rates in the country. A company that owns real estate pays income tax from the profits on the rent based on the applicable CIT rates under the Nigeria Tax Act 2025.  The income of an individual owner of real estate is also taxed  at progressive personal income tax (PIT) rates ranging from 0% (on the first ₦800,000 of total income) to a maximum of 25% (on income above ₦50 million).

These taxes can generally be reduced by reducing the taxable income through allowable deductions, such as maintenance and repair costs, management fees, interest on loans obtained for the property, and other expenses wholly and exclusively incurred in generating the rental income.

By the provisions of the Nigeria Tax Act 2025, rental or dividend income due to real estate investment companies (duly registered with the Securities and Exchange Commission) are exempt from company income tax where at least 75% of the income is to be distributed to its shareholders within 12 months following the financial year end. The rentals and dividends of a Real Estate Investment Company are exempt from withholding tax. However, withholding tax is applicable on any further distribution to the shareholders of the real estate investment company.

The owner of a property on whose behalf withholding tax deductions were made from rental income and remitted to the appropriate tax authorities is entitled to utilize the tax credit note thereof to offset the income tax liabilities for the year.

Last modified 22 Apr 2026

How can investment in real estate by an individual/organization/company be set up?

Withholding taxes at the rate of 10% apply on the dividends or distributable profits paid out to shareholders of a Real Estate Investment company or partners in a partnership. The individual shareholders or partners are subject to payment of personal income tax and may apply the withholding tax deductions made from their incomes as tax credit. It is noteworthy that Withholding tax will not apply to any distributions made to a Real Estate Investment Company itself.

Last modified 22 Apr 2026

How can investment in real estate by an individual/organization/company be set up?

Costs may accrue as fees payable to professional consultants engaged by the real estate owner or to suppliers for supplies and other services rendered and pertaining to the property.

Last modified 22 Apr 2026

How can investment in real estate by an individual/organization/company be set up?

No additional costs apply in this regard.

Last modified 22 Apr 2026

How can investment in real estate by an individual/organization/company be set up?

Capital Gains Tax is payable by the seller upon assessment at the Lands Bureau; Stamp Duty is calculated ad valorem and is also payable by the purchaser. Land Use Charges that are outstanding are payable by the purchaser before the registration of the interests in real property. Consent fee and registration fees apply for the registration of the title at the relevant State Lands Registry Offices.

Last modified 22 Apr 2026

How can investment in real estate by an individual/organization/company be set up?

Professional fees of Solicitors

The fees are either based on the scale of charges provided in the Legal Practitioners (Remuneration for Legal Documentation and Other Land Matters) Order 1991. This specifies the rates for solicitor’s charges; or by agreement of the parties based on the total value of the transaction.

Agency fees to the estate surveyors and valuers handling the sale

The fees are negotiated based on a percentage of the value of the property, fees for advertisement may also be payable if separate from the agency fee.

Surveyors’ fee for a survey plan of the property

A survey plan of the property is required for privately owned properties.

It should be noted that the Lagos State Real Estate Regulatory Authority Law 2021 which regulates the activities of registered real estate professionals in Lagos State has provided that where two or more duly certified real estate professionals are retained by the owner/vendor in the sale or purchase of a building, such persons may not charge more than 15% of the total proceeds of such sale or purchase.

Last modified 22 Apr 2026