TAX & LEGISLATION June 9, 2026 | 5 min read
A major shift has quietly taken hold in Nigeria's real estate market and many of the professionals operating within it have not yet noticed.
The Nigeria Tax Act 2025, signed into law by President Bola Tinubu on June 26, 2025, came into full effect on January 1, 2026. For the first time in Nigeria's history, all taxes related to real estate rental income, property sales, stamp duties, capital gains, VAT on construction and services now operate under a single, unified legal framework.
That means simpler rules on paper. But it also means fewer places to hide, fewer grey areas to navigate around, and real financial consequences for realtors, developers, landlords, and investors who are not up to speed.
If your agency commission is not VAT-compliant, your lease agreements are unstamped, or your capital gains are undocumented — you are already at risk.
This is not a future concern. It is a present one. Here is a breakdown of every change that directly affects you as a real estate professional in Nigeria.
1. Your Commission Is Now Explicitly VAT-able
This is the change that will hit most realtors first and hardest.
Under the new Act, agency commissions are explicitly listed as VAT-able services at 7.5%. The same applies to property valuation fees, legal conveyancing charges, and facility management fees. There is no ambiguity. If you earn a commission from a property transaction, you are required to charge VAT and remit it to the tax authority.
What this means for you: If you are not yet VAT-registered and your annual turnover exceeds the threshold, you must register immediately. Failure to charge and remit VAT on your commissions is a compliance violation and with the new Act's emphasis on enforcement and digital tracking, the days of informal practice are numbered.
2. Residential Rent and Sales Are VAT-Exempt — But Commercial Is Not
Here is where many professionals will get confused and confusion leads to mistakes.
The good news: the sale and rental of residential properties are exempt from VAT. If you are selling a family home or managing residential tenancies, VAT does not apply to the transaction itself.
The catch: commercial properties are a different story. Offices, shops, warehouses, malls, and short-term serviced apartments operated as a business attract 7.5% VAT on rent, lease, or sale proceeds. Construction and renovation services building contracts, project management, interior finishing also attract 7.5% VAT regardless of whether the property is residential or commercial.
What this means for you: Know exactly what type of property you are transacting on before pricing a deal. Mixing up the VAT treatment on commercial versus residential transactions can expose your client and you to unexpected liabilities.
3. Bare Land Sales Are Tax-Free — A Win for Plot Sellers
In a rare piece of good news, the Act explicitly exempts the sale of bare land and land titles from VAT. If you are selling an undeveloped plot or farmland, no VAT is payable on the transaction.
This is significant for realtors operating in emerging corridors like Epe, Ibeju-Lekki, Lugbe, and Idu where land trading is high-volume. Bare land transactions remain clean of VAT, which simplifies pricing and negotiation.
4. Capital Gains Are Now Fully Regulated — Document Everything
The old Capital Gains Tax Act has been absorbed into the new unified Tax Act. This means profits made on the sale, transfer, or compulsory acquisition of land and buildings are now subject to Capital Gains Tax under a clearer, more enforceable framework.
Gains are calculated on actual profit not on the full sale price. So acquisition cost, documented improvements, and sale costs are all deductible before tax is applied. The personal residence exemption remains intact: if you are selling your own home, you are exempt.
What this means for you: As a realtor advising investors or developers on property sales, you must understand how capital gains are calculated under the new law. Clients who have not documented their acquisition costs or renovation expenditure face unnecessarily high tax bills. Guide them early this is where your value as an informed professional shows.
5. Unstamped Property Documents Are Now Inadmissible in Court
The new Act reaffirms and strengthens the stamp duty requirements for property transactions. Sale agreements, deeds of assignment, lease agreements, mortgages, and property transfer documents must all be properly stamped before registration.
The consequence of non-compliance is severe: unstamped documents are inadmissible as legal evidence. That means a deal you facilitated, a lease you managed, or an investment your client made could be legally unenforceable if paperwork was not stamped correctly.
Note: Lease agreements with an annual value below ₦10 million are exempt from stamp duty.
What this means for you: Make stamping a non-negotiable part of every transaction checklist. Do not hand over keys, release funds, or close a deal without confirming that documents have been stamped. One oversight could undo an entire transaction.
6. Tenants Now Get Tax Relief on Rent — Use This to Your Advantage
The Act introduces a Rent Relief provision that allows tenants to deduct 20% of their annual rent from their taxable income, capped at ₦500,000 per year. For a tenant paying ₦2.4 million annually, that is a ₦480,000 reduction in taxable income real money.
To claim this relief, rent payments must be properly documented: receipts, bank transfer records, or a signed lease agreement showing the annual amount are all acceptable.
What this means for you: This is a selling point. When marketing rental properties to employed professionals or business owners, tell them that their rent is now partially tax-deductible. It changes the value proposition of renting —
and positions you as the informed advisor who knows things your competitors do not.
7. Mortgage Interest Is Now Tax-Deductible — A Game-Changer for Buyers
Under Section 30(2)(a)(iv) of the new Act, interest paid on loans used to develop an owner-occupied residential house is now deductible from the individual's taxable income. The government is directly rewarding Nigerians who buy or build their own homes through formal mortgage financing.
Combined with the MOFI Real Estate Investment Fund's 9.75% mortgage rate over 20 years, this represents the most favourable financing environment Nigeria has offered homebuyers in a generation.
What this means for you: Clients who have been sitting on the fence about buying versus renting now have a stronger financial case for ownership. The mortgage interest deduction reduces the real cost of homeownership for formally employed Nigerians. Use this in your client conversations.
8. REITs Are Now Properly Recognised — Opportunity for Sophisticated Investors
For the first time, Real Estate Investment Trusts and Real Estate Investment Companies are properly defined within Nigeria's tax framework. Under Section 9(2)(d), distributions made by a REIC to its shareholders from rental income are not subject to further tax eliminating the double taxation problem that previously made REITs less attractive.
What this means for you: If you serve high-net-worth clients or institutional investors, this is worth discussing. REITs are now a cleaner investment vehicle from a tax perspective and a conversation about them positions you as a sophisticated advisor, not just a transaction facilitator.
Quick Reference: What Changed & What You Must Do
Area | What Changed | Your Action |
Rent Relief | Tenants can deduct 20% of rent (max ₦500k) from taxable income | Document all rent payments with receipts or bank records |
REITs | Distributions from REITs to investors now exempt from withholding tax | Consider REITs as part of your investment portfolio |
Capital Gains | Profits on land/building sales now fully regulated under one law | Document all acquisition costs, improvements, and sale costs |
Stamp Duty | All sale agreements, leases, and deeds must be stamped to be legal | Stamp every deal before registration — unstamped = inadmissible |
VAT | Residential rent/sales exempt; commercial & services attract 7.5% | Know which transactions to charge VAT on — ignorance is costly |
Agency Commissions | Commissions are now explicitly VAT-able at 7.5% | Register for VAT if not yet done; charge and remit correctly |
Mortgage Interest | Interest on owner-occupied home loans is now tax-deductible | Inform clients — this makes mortgages more attractive |
The Bottom Line
Nigeria's Tax Act 2025 is not a threat to the real estate profession it is a filter. It will separate the professionals who adapt, document, and advise correctly from the ones who keep operating informally and hope for the best.
The realtors who understand this law will use it as a competitive edge: advising clients with authority, structuring deals with precision, and building the kind of trust that creates repeat business and referrals.
The ones who ignore it will, sooner or later, walk into a transaction they cannot explain — or face consequences they were never prepared for.
The law is already in effect. The on