Nigeria’s new Tax Act will take effect come January 2026, ushering in one of the most significant overhauls of the nation’s fiscal framework in decades. Designed to align with global standards, the law is expected to reshape the real estate and housing finance landscape but experts warn its success hinges on effective implementation, transparency, and consistent engagement.
A New Era for Real Estate and Property Investment
The Nigeria Tax Act 2025 introduces tougher anti-evasion measures, including a “top-up tax” on multinational corporations, stricter Controlled Foreign Company (CFC) rules, and more comprehensive definitions of taxable capital gains. Though primarily targeting foreign entities, these provisions will reverberate through Nigeria’s property sector, where many large projects rely on offshore financing through Special Purpose Vehicles (SPVs).
Developers could face higher taxes and tighter reporting requirements under the Federal Inland Revenue Service (FIRS), while property disposals will now attract Capital Gains Tax (CGT) on actual profits closing long-standing loopholes that allowed tax avoidance through share transfers instead of asset sales.
Stamp Duties and Luxury Property Tax
One major flashpoint is the adjustment of stamp duties on property leases above ₦10 million, which experts say could further inflate housing costs in cities like Lagos and Abuja. Similarly, a proposed 1.5% annual luxury property tax on high-end homes in areas such as Ikoyi and Maitama aims to increase revenue from wealthy homeowners but may distort the upper property market.
Impact on Developers and Mortgage Institutions
Developers and lenders are bracing for higher compliance costs and thinner margins. While the reforms may initially raise borrowing costs, experts believe long-term gains are possible if revenues are reinvested into housing infrastructure and mortgage credit.
The Real Estate Investment Trust (REIT) segment could also see changes. Though currently enjoying tax exemptions under FIRS rules, inconsistent interpretation of the new provisions could unsettle investors, highlighting the need for regulatory clarity.
Opportunities Amid Uncertainty
According to Ayo Ibaru, CEO of Northcourt, exempting residential properties from VAT and expanding recoverable input VAT to cover construction services could ease cost pressures. He urged the government to complement reforms with tax incentives for green and affordable housing.
Dr. Roland Igbinoba, President of Proptech Nigeria, described the law as transformative but warned of short-term pain. “CGT has moved from 10% to 30%. Developers must plan carefully, but over time, the law will bring greater transparency and predictability,” he said.
Estate valuer Olufemi Oyedele called for targeted reliefs to protect affordability. “Authorities should tax empty houses and channel proceeds into mortgage support for low- and middle-income buyers,” he advised.
Balancing Reform and Reality
Experts agree that implementation will make or break the reform. Without transparent processes, data-driven valuation systems, and active engagement between government and stakeholders, the benefits could be lost to confusion and overregulation.
The new tax regime marks a critical juncture for Nigeria’s real estate industry, one that could either unlock sustainable financing for affordable housing or deepen existing market imbalances, depending on how policymakers strike the balance.
By: CHINEDUM UWAEGBULAM
Source: Guardian
