Nigeria Property Tax Guide for Foreign Owners (2026): What the New Tax Act Changed

If you own or are about to own property in Nigeria as a foreigner, the tax rules you may have read about a year ago are out of date. The Nigeria Tax Act 2025, signed by President Bola Ahmed Tinubu on 26 June 2025, took effect on 1 January 2026 and rewrote large parts of how property is taxed. Some changes help owners, one change hits sellers hard, and several tighten the screws on foreign holding structures. Here is what a foreign owner actually needs to know, broken down by the moment each tax applies: when you buy, while you hold, and when you sell.

When you buy: stamp duty and consent fees

Buying triggers two main costs beyond the price. Stamp duty is payable at registration of the transfer deed, and the buyer pays it. The Federal Inland Revenue Service assesses roughly 1.5 percent of the property's market value. On top of that, perfecting a resale requires Governor's Consent under Section 22 of the Land Use Act, and the consent and registration fees typically run 3 to 5 percent of the property value. Budget 5 to 7 percent of the purchase price for these transaction costs combined, before legal and agency fees.

While you hold: rent, VAT, and the Land Use Charge

This is where the 2025 Act delivered good news. Land, buildings, and rent are now fully exempt from Value Added Tax. The reasoning is that a lease transfers an interest in land rather than supplying a good or service, so VAT does not attach. For a landlord, that removes a layer of cost and complexity that previously clouded rental arrangements.

Rental income itself remains taxable. The 10 percent withholding tax on rent is unchanged and is deducted at source where the payer is a corporate tenant. An individual tenant renting a home does not apply withholding tax unless the payment runs through a corporate entity. Whatever is withheld is an advance against your final income tax liability, not an extra tax, so it is credited when you file.

Owners in Lagos also pay the annual Land Use Charge, a consolidated state property tax. It is a separate and material recurring cost, and Lagos offers a discount of around 15 percent for early payment, so paying on time is worth real money.

How the Lagos Land Use Charge is calculated

The charge consolidates the old tenement rates, the neighbourhood improvement charge, and land rates into one annual bill payable to the Lagos State Government. Owner-occupied residential property is assessed at 0.076 percent per year of the property's assessed value, and investment or commercial property is charged at higher rates, so a unit you rent out costs more to hold than one you live in. The state sets the assessed value itself, which means the bill follows the government's valuation rather than your purchase price. Treat it as an enforced tax: Lagos collected over 14 billion naira in Land Use Charge in 2024, up 37 percent on the prior year. Exemptions exist for property owned and occupied by pensioners, places of worship, educational institutions, and public cemeteries, but the owner has to apply with evidence. Nothing is granted automatically. Owners in Abuja, Port Harcourt, or elsewhere should confirm the state equivalent, since each state legislates its own rate and assessment method.

A point foreign owners miss: if you live abroad but own Nigerian property, rental income earned in Nigeria is Nigerian-source income and is taxable in Nigeria regardless of where you live. You cannot assume that being non-resident takes the income outside the Nigerian net.

When you sell: the big capital gains change

This is the headline. Under the old regime, capital gains tax on property was a flat 10 percent of the gain. The 2025 Act raised capital gains taxation substantially, aligning the corporate capital gains rate with the 30 percent company income tax rate and folding individual capital gains into the personal income tax framework rather than leaving them at the old flat 10 percent. In practice, a company disposing of investment property now faces a materially higher capital gains bill than it did in 2025.

There is an important relief that protects ordinary homeowners: there is no capital gains tax on the sale of a dwelling house used as a residence. So a foreigner selling their own Nigerian home is treated very differently from a company or investor flipping investment stock. The structure you hold the property through now drives the tax outcome on exit more than it used to, which makes the ownership-structure decision at purchase a tax decision as well as a legal one.

The squeeze on foreign holding structures

Many foreign investors hold Nigerian property through a company or a special purpose vehicle, often offshore. The 2025 Act tightened the rules around exactly this. Controlled Foreign Company rules are stricter, the definitions of taxable capital gains are clearer and harder to plan around, and foreign special purpose vehicles face greater scrutiny from the Federal Inland Revenue Service and potential exposure to higher tax. If your plan involves an offshore SPV holding Nigerian real estate, the assumptions that worked in 2024 may not survive contact with the new law. This is the area where a foreign owner most needs current, professional Nigerian tax advice rather than a template.

The pressure is not only fiscal. State alien land laws and the Land Use Act limit the interests a non-Nigerian can hold directly, which is why many foreign owners hold through a long lease or a Nigerian-registered company in the first place. A company adds corporate filing and tax compliance on top of the property taxes, and that recurring cost belongs in the comparison when you pick the structure.

A practical checklist for foreign owners

Treat the tax side of a Nigerian purchase as three separate budgets. At purchase, set aside 5 to 7 percent for stamp duty and consent and registration fees. During ownership, account for income tax on rent with 10 percent withholding where a corporate tenant applies, the Lagos Land Use Charge if your property is there, and the fact that your rental income is taxable in Nigeria even if you are non-resident. At sale, understand that capital gains on investment property are taxed far more heavily than before, while a genuine dwelling house can be exempt.

Because the 2025 Act is new and parts of it are still being interpreted by FIRS, confirm exact rates and reliefs with a Nigerian tax adviser before you transact rather than relying on figures from earlier years. The direction of travel is clear: lighter on rent and VAT, heavier on investment gains, and tougher on offshore structures.

Verify the asset, not just the tax

Tax planning only matters if the underlying purchase is sound. A heavy capital gains bill is a good problem to have because it means the asset appreciated and the title held. The disaster scenario is paying full price and taxes on a property whose developer never delivers or whose title cannot be perfected. Before you reach the tax stage, confirm the developer's delivery record. Platforms like Bektu (https://bektu.com) let foreign buyers check whether a developer has actually completed and titled the projects it markets, which protects the principal that all this tax planning is meant to grow.