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Selling land, a house or commercial property in Nigeria can have tax implications. However, the amount of tax you may owe is not necessarily calculated on the entire selling price.
The starting point is to determine the gain from the disposal of the property, taking into account the acquisition cost and qualifying expenses permitted under the applicable tax rules.
Nigeria's tax framework changed on 1 January 2026 with the commencement of the Nigeria Tax Act 2025. As a result, property sellers should not automatically assume that the former flat 10% Capital Gains Tax rate applies to every disposal under the new framework.
This guide explains how to calculate a gain on a property sale, which expenses may qualify for deduction, and what property owners should consider when determining their tax position.
How Is the Gain on a Property Sale Calculated?
The basic calculation compares the amount received from selling the property with the relevant acquisition cost and allowable expenses.
A simplified formula is:
Chargeable Gain = Disposal Proceeds − Allowable Costs
Disposal proceeds are the amount received, or treated as received, from selling the property.
Allowable costs may include the qualifying cost of acquiring the property, eligible expenditure incurred to enhance its value, and qualifying incidental expenses connected with its acquisition or disposal.
The actual calculation must follow the applicable tax legislation. Special rules may apply to business assets, partial disposals, transactions between connected persons and other circumstances.
Importantly, calculating the chargeable gain is not the same as calculating the final tax liability. The tax treatment depends on the taxpayer, the nature of the transaction, applicable reliefs and the rules in force when the disposal occurs.
Which Property Expenses May Be Deductible?
Keeping records of the costs associated with buying, improving and selling a property can make a significant difference when calculating a chargeable gain.
Under the applicable rules, qualifying expenses may include the following.
Property Acquisition Costs
These are costs directly connected with acquiring the property. Depending on the circumstances, they may include the purchase price and qualifying incidental expenses, such as legal fees, surveyor or valuation fees, and relevant transfer costs.
Capital Improvements
Expenditure incurred to enhance a property's value may qualify where it meets the applicable legal conditions.
Examples could include constructing an additional building, extending an existing structure, installing permanent improvements or adding qualifying infrastructure to a plot of land.
The key consideration is whether the expenditure qualifies under the relevant tax rules. Not every amount spent on a property is automatically deductible.
Property Disposal Costs
Certain expenses incurred specifically to sell a property may also qualify.
Examples can include estate agent commissions, qualifying legal fees and professional fees directly associated with the disposal.
Keep invoices, receipts, contracts and payment evidence to support any costs you intend to claim.
Routine repairs, maintenance expenses, personal expenditure and amounts already deducted for another tax purpose should not automatically be treated as deductible capital costs. Their treatment depends on the applicable rules and circumstances.
Worked Example: Calculating the Gain on a Land Sale
Suppose an individual purchases a plot of land and later sells it. The following figures illustrate how the gain may be calculated before determining the applicable tax treatment.
Selling price: ₦60,000,000
Original purchase price: ₦30,000,000
Documented qualifying improvements: ₦5,000,000
Qualifying expenses directly associated with the sale: ₦4,000,000
Step 1: Add the acquisition cost and qualifying expenses.
₦30,000,000 + ₦5,000,000 + ₦4,000,000 = ₦39,000,000
Step 2: Subtract the allowable costs from the selling price.
₦60,000,000 − ₦39,000,000 = ₦21,000,000
Illustrative gain: ₦21,000,000.
This example assumes that all the listed expenses qualify for deduction and that no other adjustments, exemptions or special rules apply.
The ₦21,000,000 figure is the illustrative gain, not the final tax payable. The applicable tax must be determined separately under the rules relevant to the seller and the disposal.
What Is the Capital Gains Tax Rate on Property in Nigeria?
Nigeria's tax framework changed from 1 January 2026 under the Nigeria Tax Act 2025.
Under the former Capital Gains Tax Act, the generally applicable rate was 10% of chargeable gains. However, the new framework brings chargeable gains into the income-tax system, so property sellers should not automatically apply the former 10% rate to disposals under the new rules.
The applicable tax treatment depends on factors such as whether the seller is an individual or a company, the circumstances of the disposal, and any relevant exemptions or reliefs.
The treatment of a property sold by an individual may differ from that of a property sold by a company. Business assets may also be subject to specific computational rules.
Before calculating the final tax payable, consult the current legislation and guidance applicable to your transaction.
For the legislation, see the Nigeria Tax Act 2025:
https://www.nipc.gov.ng/wp-content/uploads/2025/07/Nigeria-Tax-Act-2025.pdf
Are Any Property Sales Exempt from Tax?
Not every disposal necessarily results in the same tax liability. The applicable legislation provides rules governing chargeable gains, exemptions and other relevant circumstances.
Whether an exemption or relief applies depends on the nature of the asset, the seller, how the property is used and the conditions specified in the law.
For example, a property used as an individual's private residence may require different consideration from a commercial property held for investment or used in a business.
Similarly, rules applicable to qualifying business assets may differ from those applicable to privately held property.
Do not assume that selling your primary residence, reinvesting the proceeds in another property, or operating a small business automatically eliminates any tax liability. Confirm the specific statutory conditions before claiming an exemption or relief.
Who Handles Property-Related Capital Gains Tax?
The appropriate tax authority depends on the taxpayer and the applicable tax administration rules.
For individuals, personal income tax matters are generally administered by the relevant State Internal Revenue Service, subject to the applicable rules and any special circumstances.
For companies, the relevant federal tax authority administers the applicable company tax obligations under the current framework.
Property transactions may also involve separate administrative procedures, such as title registration, consent requirements and stamp duties. These should not be confused with the calculation of tax on a gain from disposing of the property.
Because tax administration and property registration are separate matters, confirm the applicable filing, payment and documentation requirements with the relevant tax authority and land registry.
Keep Better Asset Records with TaxMateNG
One of the challenges in calculating a gain on property or another asset is locating the records needed to establish its original cost and subsequent qualifying expenditure.
Years after purchasing land or improving a building, owners may struggle to find purchase documents, invoices, receipts and records of major improvements.
Organized records can make it easier to reconstruct the history of an asset and support the figures used in tax calculations.
TaxMateNG is an offline-first financial and tax management application designed for Nigerian users. Its asset and financial record-keeping capabilities can help users organize relevant information on supported devices.
Depending on the features used, TaxMateNG can help users maintain records of asset acquisition costs, organize supporting financial information and prepare records for review.
Keeping these records up to date can make future financial reporting and tax preparation easier.
Learn more about TaxMateNG:
https://www.taxmateng.ng/
Download TaxMateNG for Windows, Mac, Android and iOS:
TaxMateNG download
Final Reminder
When selling land or property in Nigeria, begin by establishing the disposal proceeds and the acquisition costs and expenses that qualify under the applicable rules.
Then determine how the resulting gain is treated for tax purposes. Do not assume that the former 10% Capital Gains Tax rate automatically applies to disposals under the tax framework that took effect in 2026.
Keep your supporting documents, check the rules relevant to your circumstances and seek professional advice where necessary.
This article is for general informational purposes and is not a substitute for professional tax advice.
Sources
Nigeria Tax Act 2025 — Provides the current statutory framework for calculating gains on asset disposals and determining their tax treatment.
https://www.nipc.gov.ng/wp-content/uploads/2025/07/Nigeria-Tax-Act-2025.pdfFederal Ministry of Finance — Tax reform transition guidelines explaining the implementation of the 2025 tax legislation from 1 January 2026.
https://finance.gov.ng/ministry/federal-government-issues-transition-guidelines-for-tax-acts-2025/
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