If you own property in Nigeria or aspire to you should be aware that property ownership comes with certain tax obligations. Whether you’re building, renting out, or selling real estate, there are taxes to be paid to various levels of government. In some cases, you’re taxed simply because your property benefits from public infrastructure.

Property taxes can vary widely across Nigeria. Some are nationally applicable, while others are imposed at the state or local government level. Either way, they represent a cost to the property owner one that may be passed on to tenants or buyers. This post will walk you through the key facts about property taxation in Nigeria and what you need to know to stay compliant.

Fact 1: Nigeria Has a Range of Property Taxes

Most property taxes in Nigeria are administered by state governments, but local councils also impose levies on residential and commercial buildings. Here are some common taxes and fees:

• Land Use Charge (LUC): Typically applied to rental properties. In Lagos, this combines tenement rate, ground rent, and neighborhood improvement levy into a single charge.
• Governor’s Consent Fee: Required for legally registering real estate transactions involving land ownership.
• Stamp Duty: Charged on documents related to property sales or leases.
• Capital Gains Tax: A 10% tax on the profit earned from selling property.
• Survey Fees: Paid during land registration and survey processes.
• Environmental Impact Assessment Fee: Required for assessing environmental effects of real estate development projects.

Fact 2: Tax Rates Depend on Multiple Factors

Several factors influence how much tax is charged on a property:

• Location and Demand: Properties in high-demand or affluent areas are usually taxed at higher rates.
• Land Use: Taxes differ for residential, commercial, and agricultural land.
• Property Size: Larger properties typically incur higher taxes.
• Policy Changes: Rates can be adjusted by government reforms or economic conditions.

Fact 3: Commercial Properties Are Taxed Higher

In the Federal Capital Territory (FCT), residential properties are taxed at 0.4% of their value, while commercial properties are taxed at 0.6%. Lagos applies a 0.456% rate for all property types, but owner-occupied residential properties enjoy a 40% discount—benefits not extended to commercial or industrial properties.

Fact 4: Taxes Can Be Flat Fees or Percentage-Based

Some levies are fixed in absolute terms. For example, a local government might impose a ₦500 per square meter development levy annually. In parts of Lagos, development levies range between ₦100,000 and ₦200,000.

Other taxes are based on property value or transaction profit, such as:

• Capital Gains Tax: 10% of any profit from a property sale.
• Stamp Duty: 1.5% of the property’s value.

Fact 5: You Have Multiple Payment Options

Property taxes can be paid through several channels:

1. Designated Bank Accounts: Payments can be made to specific banks authorized by the government.
2. Online Platforms: Many states, including Lagos, have e-tax portals like the LIRS Portal.
3. Tax Consultants: If the process seems overwhelming, you can hire a professional to handle it on your behalf.

Navigating Nigeria’s property tax system can be complex, especially since rules and rates vary from one state to another. But understanding the basics will help you meet your legal obligations and avoid penalties. Whether you’re a landlord, a property investor, or just planning to enter the market, being informed is your first step toward responsible property ownership.

For professional advice on Accountancy, Transfer Pricing, Tax, Assurance, Outsourcing, online accounting support, Company Registration, and CAC matters, please contact Inner Konsult Ltd at www.innerkonsult.com at Lagos, Ogun state Nigeria offices. You can also reach us via WhatsApp at +2348038460036.