Few fiscal reforms in recent years have garnered as much attention as the Nigeria Tax Act (NTA) 2025. What began as a technical attempt at consolidating Nigeria’s fragmented tax statutes has evolved into a structural reset with far-reaching implications for businesses, investors, and households. For the real estate sector, the Act is not merely another compliance requirement–it represents a structural shift in pricing behaviour, holding strategies, and documentation culture.
By repealing and consolidating multiple tax statutes – including the Companies Income Tax Act, Personal Income Tax Act, Capital Gains Tax Act, Value Added Tax Act, and Stamp Duties Act – into a single, unified Act, the NTA 2025 introduces a clearer, more consistent, and practicable structure to Nigeria’s tax system. Effective 1 January 2026, the Act repositions tax considerations from back-office functions to the centre of deal structuring, investment decisions, and long-term planning. Below are the principal taxes under the NTA 2025 that directly affect real estate transactions in Nigeria.
Withholding Tax (WHT)
Withholding tax remains a cornerstone of tax administration under the new Act. Defined as an advance payment of tax deducted at source and remitted to the tax authority, WHT continues to apply to rent payments, professional fees, construction services, agency commissions, interest, royalties, and dividends. Under the NTA 2025, corporate tenants and institutional clients now bear greater responsibility as tax collection agents; failure to deduct and remit WHT on qualifying payments can attract penalties. Rents paid for residential property, on the other hand, are generally not subject to withholding tax, as individual tenants are not designated WHT collection agents under the new Act.
A notable clarification concerns Real Estate Investment Trusts (REITs). Previously governed by a combination of Companies Income Tax at the corporate level and Withholding Tax at the investor level – creating a form of double taxation – the NTA 2025 now clearly exempts distributions from REITs to shareholders from further taxation. This is likely to enhance the appeal of REITs to both local and foreign investors seeking stable, income-producing assets.
Capital Gains Tax (CGT)
One of the most significant changes introduced by the NTA 2025 is the integration of capital gains into the income tax framework. Under the repealed Capital Gains Tax Act, gains from property disposals were taxed at a flat rate of 10%. The new regime replaces this with a system where gains from the disposal of land and buildings form part of taxable income. For medium and large companies, such gains are now effectively taxed at 30%, while individuals are taxed at progressive personal income tax rates ranging from 0% to 25%.
Importantly, the Act draws a distinction between investment assets and trading stock. Real estate held as stock-in-trade (properties developed or acquired for resale) does not attract CGT when sold, as the profit is instead treated as business income.
Exemptions remain for small companies (those with annual turnover not exceeding ₦50M and fixed assets not exceeding ₦250M), charitable properties, and personal private residences. The personal residence exemption applies to owner-occupied dwelling houses with up to one acre of adjoining non-commercial land. Critically, this exemption is available only once in an individual’s lifetime – a significant restriction compared to the more open-ended provisions under the repealed CGT Act.
While this increase in CGT rates is poised to boost government revenues, it raises important questions for the real estate market. Higher disposal taxes may discourage speculative property flipping and quick exits, while encouraging longer holding periods and income-generating strategies. Developers and investors must now pay closer attention to acquisition costs, improvement expenses, and exit timing, as the margin for error in calculating gains has narrowed significantly.
Personal Income Tax
Rental income remains fully taxable under the NTA 2025, with landlords expected to declare rental earnings annually and claim only allowable deductions. Enforcement around benefit-in-kind, particularly employer-provided accommodation, has also been strengthened, with defined valuation rules now capping the taxable benefit at 20% of gross income from employment.
A key innovation under the new Act is the introduction of Rent Relief, which replaces the broad-based Consolidated Relief Allowance under the previous Act. Individuals who pay rent can now deduct 20% of their annual rent paid, up to a maximum of ₦500,000 (whichever is lower), from their taxable income. This relief, however, hinges on accurate rent disclosure and proper
documentation.
While renters benefit from tax relief, this provision creates an audit trail that gives tax authorities clearer visibility into rental transactions. Over time, this may encourage more formal lease agreements and increased adoption of banked transactions. Whether landlords respond by moderating rent increases to avoid higher tax exposure remains an open question.
Value Added Tax (VAT)
The NTA 2025, though retaining the VAT rate at 7.5%, has clarified and expanded its application. Land and buildings, including interests in them, are declared VAT-exempt. This means no VAT applies to property sales or residential rents. However, services connected to real estate, such as agency, valuation, legal, and property management, remain subject to VAT.
A more significant reform lies in the expansion of input VAT recovery. Businesses can now claim input VAT on services and fixed assets, including capital expenditure, provided such costs are directly linked to taxable supplies. This change reduces cascading tax effects and improves cash flow for businesses. However, this benefit is conditional on accurate invoicing and timely filings. Non-compliance now carries higher penalties, particularly as electronic invoicing becomes mandatory.
Stamp Duties
The NTA 2025 reaffirms the continued relevance of stamp duties, confirming that legal documents transferring property ownership attract a stamp duty of 1.5% of the property value. Clearer thresholds have also been introduced for leases: lease agreements with an annual rental value below ₦10 million are exempt, while leases under 7 years attract a lower rate (0.78%) than longer-term arrangements (3%). The new Act also reinforces the long-standing rule that unstamped documents remain legally inadmissible. This will likely boost Nigeria’s documentation standards and improve transaction transparency.
Alongside these measures, the NTA 2025 introduces mortgage relief for individuals who finance owner-occupied houses through formal loans. Interest paid on such loans can be deducted from taxable income, provided the property is owner-occupied and limited to one residence. Investment and rental properties are excluded, underscoring a deliberate policy to support primary housing needs over speculative investment.
The Nigeria Tax Act 2025 signals a decisive turn toward transparency, enforcement, and economic growth. For the real estate sector, the Act is set to reshape trends across the value chain – in how properties are priced, held, financed, and disposed. Professionals and investors who understand how withholding tax, capital gains tax, personal income tax, value-added tax, reliefs, and stamp duties interact will be better positioned to structure deals and protect long-term value.