Capital Gains Tax on Property in Nigeria: What You Pay When You Sell

When you sell a property in Nigeria at a profit, Capital Gains Tax (CGT) may apply to the gain you make. The rate is 10% — but there are important exemptions, including one that means most owner-occupiers selling their home pay no CGT at all. This guide explains how CGT works on property disposals in Nigeria.

What is Capital Gains Tax in Nigeria?

Capital Gains Tax is a tax on the profit (gain) made from disposing of a chargeable asset — which includes real property (land and buildings). The legal framework is the Capital Gains Tax Act (CGTA), Cap C1 LFN 2004, as amended by subsequent Finance Acts.

Key features:

• The tax is on the gain, not the sale price — the gain is sale price minus original cost minus allowable deductions
• The CGT rate is a flat 10%
• CGT is administered by FIRS (for corporate bodies and certain individuals) and State IRS (for resident individuals in some cases)
• Important exemptions exist, including the principal private residence relief

How the chargeable gain is calculated

The chargeable gain on a property disposal is:

Disposal proceeds (the sale price) minus the following allowable deductions:

• Original acquisition cost: What you paid for the property (including stamp duty and legal fees paid at acquisition)
• Allowable improvement expenditure: Capital expenditure that enhanced the value of the property (e.g., an extension, structural upgrade) — not ordinary maintenance
• Incidental costs of disposal: Estate agent fees, solicitor fees, and other costs directly incurred in making the disposal

Example: You bought a property for ₦15 million (including acquisition costs). You spent ₦3 million on capital improvements. You sold it for ₦45 million and paid ₦1 million in disposal costs. Gain = ₦45m - ₦15m - ₦3m - ₦1m = ₦26 million. CGT at 10% = ₦2.6 million.

The principal private residence exemption

This is the most important CGT exemption for residential property sellers. Under Section 30 of the CGTA:

A gain accruing to an individual on the disposal of a dwelling house is exempt from CGT if the dwelling house has been the individual's sole or main residence throughout the period of ownership.

Practically: if you are selling the house you have been living in as your primary home — throughout the time you have owned it — the gain on that sale is not subject to CGT.

The exemption does not apply to:

• Investment properties let to tenants (not your main home)
• A second property (holiday home, second residence)
• Property held by a company
• Property where you were not in continuous occupation as your main residence

Other CGT exemptions relevant to property

• Gains below the annual exemption threshold: The CGTA provides for a small annual exempt amount — gains below this threshold are not chargeable. The threshold is relatively low and should be checked against the current CGTA provisions.
• Transfers between spouses: Transfers of property between spouses are typically treated at a no-gain, no-loss basis (with the transferee taking over the original cost).
• Transfers on death: Assets passed to beneficiaries on death do not trigger CGT at the point of death.

When and how to pay CGT on property

1. Calculate the gain on the disposal (sale price minus allowable deductions)
2. Determine whether any exemption applies (PPR relief, etc.)
3. If CGT is due, file a Capital Gains Tax return with FIRS or the relevant IRS
4. Pay the 10% CGT on the chargeable gain

In practice, CGT on Nigerian property disposals is often not paid — many transactions are underdeclared or the CGT obligation is not recognised. However, FIRS has been increasing enforcement and awareness. For high-value transactions, the reputational and financial risk of non-compliance is significant.

CGT on investment properties: the practical position

For property investors who sell rental properties or investment land:

• The PPR exemption does not apply — CGT is due on the gain
• The cost base is the original acquisition cost plus capital improvements
• Proper record-keeping from the time of purchase (original receipts, legal fees, improvement invoices) is essential to minimise the assessable gain
• Getting professional tax advice before a major property disposal is worthwhile for properties where the gain is substantial

Related guides: Property tax in Nigeria (all taxes), Rental income tax Nigeria, Property flipping in Nigeria, How to sell property in Nigeria.