Starting January 1, 2026, Nigeria’s new tax law changes how people buy, sell, rent, and own property.
- Capital Gains Tax: Companies will now pay 30% when they sell property for profit. Individuals will pay tax based on their personal income tax rate, not the old flat 10%.
- Rent Relief: Tenants can get 20% of their rent (up to ₦500,000) off their taxable income — but only if they have receipts and valid agreements.
- Stamp Duty: Longer leases now attract higher tax — 0.78% for short leases, 3% for mid-length, and 6% for very long leases.
- Tax Residency: Nigerians abroad may pay tax on property income from Nigeria, depending on how long they spend in the country (183 days rule).
Let’s break all this down in plain English so you know exactly how it affects you — whether you live in Nigeria or abroad.
What’s Really Changing in 2026?
The 2026 tax reform isn’t just another government policy. It’s a major change in how property income, rent, and sales are taxed.
Here’s a simple breakdown:
- Capital Gains (Profit when you sell) – Taxed higher now. Companies pay 30%, individuals pay based on their income tax rate.
- Rent Relief – Tenants can reduce their taxable income by up to ₦500,000 if rent is properly documented.
- Stamp Duty – Long-term leases attract higher tax. Think of it as paying more for longer agreements.
- VAT and WHT on Rent – Rent for homes (residential) is still not charged VAT, but companies renting houses must still pay 10% withholding tax (WHT).
- Tax Residency – If you live abroad but earn rental income in Nigeria, you might still pay Nigerian tax on that rent.
In short, everyone from landlords to tenants to Nigerians in the diaspora will be affected in one way or another.
2. If You’re Selling Property: Higher Capital Gains Tax
Before now, when you sold land or a house, you paid 10% Capital Gains Tax on the profit.
From 2026, that changes:
- Companies will pay 30% of the profit.
- Individuals will pay based on their personal income tax band, which can be as high as 24%.
Example:
You bought land for ₦20 million and sold it for ₦30 million. Your profit is ₦10 million.
- Old tax: 10% = ₦1 million.
- New tax: If you fall under the 24% income band, you’ll pay ₦2.4 million.
Tip: Keep all documents — purchase receipts, building expenses, and title papers. They’ll help reduce how much of your profit is taxable.
3. If You’re Renting or a Tenant: New Rent Relief
Tenants finally get some relief. Starting in 2026, you can deduct 20% of your rent or ₦500,000 (whichever is smaller) from your taxable income.
But here’s the catch: it only works if your landlord gives you a proper receipt and a signed tenancy agreement.
For Tenants:
- Ask your landlord for official receipts.
- Make rent payments through traceable channels (bank transfers, not cash).
- File your tax correctly to claim the relief.
For Landlords:
- Issue receipts and keep clear rent records.
- The more transparent you are, the more tenants will prefer you (and you’ll avoid trouble with the tax office).
Why it matters: Tenants get a small win, but landlords must formalize their processes.
4. Stamp Duty: The Hidden Cost on Long Leases
Stamp duty is the tax on leases and property documents. In 2026, the government is enforcing it more strictly.
Here’s the rate guide:
- Leases under 7 years: 0.78% of total rent.
- Leases between 7 and 21 years: 3%.
- Leases longer than 21 years: 6%.
Example:
If you rent a house for ₦2 million a year for 10 years = ₦20 million total rent.
Stamp duty = 3% of ₦20 million = ₦600,000.
Tip for Developers and Landlords: Consider shorter lease terms (like 5 or 7 years) to reduce stamp duty costs.
5. VAT, WHT, and Other Rental Taxes
Here’s what stays the same:
- Residential rent still has no VAT — so you don’t pay extra tax on your rent.
- Commercial rent (like shops and offices) may still attract VAT.
- Companies renting property must deduct 10% WHT from rent and pay it to FIRS.
Tip: Keep rent agreements clear on whether it’s residential or commercial to avoid mix-ups.
6. Nigerians in the Diaspora: Here’s What You Need to Know
If you’re a Nigerian living abroad, this part’s for you.
- If you own property in Nigeria and earn rent, that rent is Nigerian-sourced income, and it’s taxable in Nigeria.
- If you sell land or a house in Nigeria, you’ll also pay Nigerian CGT — even if you’re abroad.
- You’re considered a Nigerian tax resident if you spend 183 days (about six months) or more in Nigeria in a year. Residents pay tax on worldwide income.
Example:
If you live in the UK and own an apartment in Lagos that earns ₦3 million rent yearly:
- Your property manager or tenant must withhold 10% (₦300,000) and pay it to FIRS.
- You can claim credit for this tax in your country if both countries have a double taxation agreement (DTA).
Tip: Work with a property manager who handles tax paperwork for you.
7. State Charges Still Apply
This new federal tax reform does not cancel state taxes.
You’ll still pay:
- Land Use Charge (especially in Lagos).
- Consent fees and registration fees for property transfers.
So plan for both federal and state costs when buying or selling property.
8. How All These Changes Affect You
| Category | What Happens | What You Should Do |
|---|---|---|
| Landlords | More formal rent documentation; WHT tracking | Issue receipts, keep ledgers, file taxes annually |
| Tenants | Rent relief (up to ₦500k) | Ask for receipts, claim relief during tax filing |
| Developers | Higher compliance costs | Include taxes in project budgets, use shorter leases |
| Diaspora Nigerians | Rent & sales in Nigeria remain taxable | Work with tax-compliant managers, avoid double taxation |
| Flippers/Investors | Higher CGT on quick resales | Hold properties longer or plan sales before 2026 |
9. Preparing Before 2026
- Update your property documents and receipts.
- Understand your income band and how it affects your CGT.
- If you’re a tenant, start collecting receipts now.
- Talk to a tax advisor if you earn rent in Nigeria while living abroad.
- Stay updated — follow LandsOfNigeria.com for simplified guides.
Frequently Asked Questions (FAQ)
1. When does the new law start?
It starts on January 1, 2026. Transactions before that still follow the old rules.
2. Will rent become more expensive?
Not necessarily. But landlords might adjust prices to cover taxes or formal documentation costs.
3. I’m a tenant. How do I get my rent relief?
Keep your receipts and tenancy agreement. You can claim 20% (up to ₦500,000) of your annual rent when filing your taxes.
4. I live abroad but own property in Nigeria. Do I pay tax?
Yes, if you earn rent or sell property in Nigeria. The income is considered Nigerian-sourced and taxable.
5. What if I spend less than six months a year in Nigeria?
You’re not considered a Nigerian tax resident, so your foreign income isn’t taxed — but your Nigerian property income still is.
6. Do I still pay Land Use Charge in Lagos?
Yes. The new tax law doesn’t replace or cancel state property charges.
7. How can I reduce my taxes legally?
Keep good records, use official documents, claim all available reliefs, and pay through traceable channels.
8. What’s the biggest mistake to avoid in 2026?
Not formalizing your rent or property sale. Without proper receipts, you can’t claim relief or prove your costs.
Final Thoughts
The 2026 tax reform may look complicated, but once you understand the basics, it’s manageable. It’s all about being transparent and prepared.
Whether you’re a landlord, tenant, or a Nigerian in the diaspora, the key is documentation and awareness.
