Property tax is the yearly fee paid by a land owner to the local government of the area where his/her property is situated. The property includes all tangible real estate property, office buildings and the property rented to other persons. Money gotten from property taxes is used by the government to fund education, roads and highway construction and other things that citizens benefit from widely. Property tax rates vary from country to country and from state to state. Many Nigerians don’t know they exist or they just choose to ignore them. Some of the property taxes that you should pay attention to if you own property in Nigeria or intend to, are:
- Capital Gains Tax (CGT): Anytime a real estate asset in Nigeria or outside Nigeria is sold by a Nigerian tax payer, a gain is derived off the sale and the gain is 10%. This tax does not apply when a person sells their private residence to another person to use as a private residence. Capital Gains Tax does not apply to commercial motor vehicles and personal gifts that fetch no monetary gains.
- Governor’s Consent: This is a tax fee that enables the transfer of ownership of real estate properties be considered legal in the sight of the government. If a person decides to sell their property to another person, the new owner has to obtain the consent of the governor so the transaction can be certified as legal and acceptable. As many times as the property is sold to a new person, governor’s consent needs to be renewed. A new owner of a real property or estate in Lagos state is required to pay 3% of the accepted consideration of the property as registration fee and a further 8% of the value of the property as governor’s consent fee.
- The Federal Capital Territory Property Tax Bill: The Nigerian National Assembly will soon pass into bill the FCT Property Bill. This is a bill imposed on all real property situated within the Federal Capital Territory, Abuja. Commercial properties are taxed at 1.5% of the appraised current market value of the property while non-commercial properties are taxed at 1% of the appraised market value of the property. The only properties excluded from this tax are the ones owned, occupied and used by religious bodies for religious purposes. Other persons excluded from this tax are non-profit making cemeteries, public parks, properties used by public institutions.