From January 1, 2026, Nigeria’s tax system is completely overhauled. The new Nigeria Tax Act 2025 replaces old laws and changes how property is taxed — including capital gains, rent relief, stamp duties, and income tax allowances. These reforms affect buyers, sellers, landlords, tenants, and Nigerians in the diaspora. Below is an easy comparison of the old vs new rules and what they mean for everyday real estate decisions.
Nigeria Tax Reform 2026
A breakdown of key changes in the new tax framework
By LandsOfNigeria
Capital Gains Tax: Big Shift in 2026
Old System:
Under the previous Capital Gains Tax Act, individuals paid a flat 10% on the profit when they sold property.
New System (2026):
Under the Nigeria Tax Act 2025, CGT is no longer a flat percentage:
- Individuals now pay CGT at their personal income tax rate, up to 25% (progressive bands).
- Companies must align CGT with Corporate Income Tax (CIT) — typically up to 30%.
- Some specific exemptions apply (like sales of certain low-value assets). EY
What this means for you:
- If you owned land or property and sell it after 2026, your tax bill could be larger than before.
- If you reinvest gains quickly, some exemptions may still apply — so planning is key.
Rent Relief: A New, Simpler Allowance
Old System:
Taxpayers used the Consolidated Relief Allowance (CRA), which bundled several reliefs together.
New System:
The CRA is replaced with a rent relief under the new tax rules:
- You can deduct 20% of your annual rent from taxable income
- The deduction is capped at ₦500,000
- You must prove actual rent (receipts, agreement, landlord details) to claim it. Mondaq
What this means:
- Tenants benefit from lower taxable income if they keep good rent records.
- Landlords benefit too, because formal rent documentation is now more necessary.
VAT & Real Estate: A Big Relief for Buyers and Renters
One of the most important shifts under the new tax law is the VAT treatment of real estate transactions.
Old Rules:
It was unclear or inconsistent whether VAT applied to land and property in some cases, especially for developers and non-residential transactions.
New Rules (2026):
Government officials and tax authorities confirmed that:
- No VAT on real estate sales
- No VAT on rent (especially residential rent) Nairametrics+1
Why this matters:
This can make real estate significantly less expensive to buy or rent, because buyers and tenants no longer fear hidden VAT costs.
Stamp Duties: More Clarity, Including Digital Documents
Stamp duties used to apply mainly to physical leases and transactions under the old Stamp Duties Act.
Now, under the unified tax law:
- Electronic contracts and digital signatures are officially recognized and taxable where applicable.
- Stamp duties still apply on leases and transfers, and details around rate structure remain similar but with expanded scope. Ogbemudje, Omezi & Co.
What this means:
If you sign contracts digitally — which many do today — the law now clearly states they’re valid and enforceable for taxes.
Income Tax & Deductions (How You’re Taxed Overall)
Old Rule (PITA):
Taxpayers got CRA and other deductions that often reduced taxable income significantly.
New Rule (Nigeria Tax Act 2025):
- CRA is scrapped.
- Rent relief is now the main deduction related to housing.
- The tax bands are progressive, ranging from 0% to 25%.
- Other allowances (like pension, NHF) still exist but must be documented properly. EY Tax News+1
Example:
An individual earning below a certain threshold pays 0%, but as income rises, you pay progressively up to 25%.
What This Means for Diaspora Nigerians
The new tax law is clearer about residency:
- If you spend 183 days in Nigeria, you may be seen as a Nigerian tax resident.
- Residents are taxed on worldwide income.
- Non-residents are taxed on Nigeria-sourced income (such as rent from property in Nigeria). Forvis Mazars
Key takeaway:
If you own property in Nigeria and earn rent, you will have tax responsibilities even if you live abroad — especially once you reach the 183-day test or choose to live back home.
What Has NOT Changed (Important to Know)
✔ State property taxes (like Lagos Land Use Charge) still apply.
✔ Stamp duty rates based on lease length remain generally similar (a small percentage of value).
✔ Rent is still exempt from VAT (good news for tenants).
✔ Documentation is now more important than ever — receipts and contracts save you money. EY Tax News
Common Questions About 2026 Tax Law vs Old Rules
Q: Does rent now attract VAT?
A: No. The 2026 tax law confirms that rent and land sales are exempt from VAT. Nairametrics
Q: Is capital gains still 10%?
A: No. You now pay CGT at your personal tax rate (up to 25%) or at company rates (up to 30%). EY Tax News
Q: Can I still use the old reliefs like CRA?
A: No. CRA is removed and replaced with rent relief only. Mondaq
Q: I live abroad — will I pay Nigerian tax on my real estate?
A: Yes, on Nigeria-sourced income like rent or profits from selling property. You may also be taxed on worldwide income if you spend 183 days in the country. Forvis Mazars
Q: Will these changes affect property prices?
A: Taxes don’t directly set prices, but lower VAT and clear CGT rules may encourage more transactions and lower costs overall.
Final Thoughts
The 2026 tax law is not just a tweak — it’s a complete rewrite of Nigeria’s tax system. For real estate owners, investors, buyers, and renters, understanding the old rules vs new rules is now essential.
With clearer definitions, progressive tax rates, and specific real estate provisions (like rent relief and VAT exemptions), this law aims to simplify taxation but also demands better record-keeping and tax compliance.
Planning ahead — whether you’re buying, selling, renting, or investing — will save you money and stress when the law takes effect on January 1, 2026.
