What Happens When You Sell Your Property?
Imagine this: Adebayo just sold his investment property in Lagos for ₦45 million—₦20 million more than he paid six years ago. He's celebrating the profit when his lawyer mentions something about "Capital Gains Tax." Suddenly, Adebayo realizes he has no idea what this tax is, how much he owes, or when he needs to pay. Sound familiar?
You're not alone. Capital Gains Tax (CGT) is one of Nigeria's most misunderstood taxes, yet it affects anyone who sells property, land, or certain other assets at a profit. The good news? Once you understand the basics, CGT is actually straightforward—and many of your personal belongings are completely exempt.
This guide breaks down everything you need to know about Capital Gains Tax in Nigeria, from what it is to how to calculate it, when to pay, and most importantly, what you don't have to pay tax on.
What Exactly Is Capital Gains Tax?
Capital Gains Tax is a tax on the profit you make when you sell an asset for more than you paid for it. Notice the key word: profit, not the sale price.
Let's say Chioma bought land in Abuja for ₦12 million and later sold it for ₦20 million. Her profit (capital gain) is ₦8 million—and that's what gets taxed, not the full ₦20 million sale price.
CGT is governed by the Capital Gains Tax Act (CGTA) and administered by the Nigeria Revenue Service (NRS), not your state tax office. This is important because many people mistakenly file with the wrong agency.
How Is CGT Different from Stamp Duty?
This confuses almost everyone, so let's clear it up right now:
• Capital Gains Tax (10%): Taxes your profit from selling an asset. You calculate the gain and pay 10% of that gain to NRS.
• Stamp Duty (0.78% for properties up to ₦50 million; 1.5% above ₦50 million per Finance Act 2020): Taxes the document that transfers ownership. You pay this on the sale price to NRS (through banks), regardless of whether you made a profit.
Here's the critical point: You pay BOTH taxes on property sales—they're completely separate. CGT taxes your financial gain; stamp duty taxes the legal transfer document. Think of them as two different charges for two different things.
Which Assets Are Subject to CGT?
The law defines "chargeable assets" very broadly as "all forms of property," but several important items are specifically exempt. Here's what you need to know:
Assets That ARE Taxable (Chargeable Assets):
• Real estate and land (except your primary residence—more on this below) • Business assets like equipment, machinery, and buildings • Patents, trademarks, and intellectual property rights • Goodwill when selling a business • Foreign property and assets (Nigerian residents pay CGT on worldwide gains)
Assets That Are EXEMPT from CGT:
• Your primary home (only ONE residence qualifies under Section 38 CGTA) • Stocks and shares (completely exempt under Section 32—stock market profits are CGT-free!) • Your personal car (private motor vehicles are exempt under Section 31) • Government securities like Treasury Bills and bonds • Life insurance policies • Personal belongings like furniture, clothing, jewelry for personal use • Decorations and awards for valor or achievement • Gifts between family members (spouse, children, parents—exempt under Section 22) • Property received through inheritance (CGT applies only when you later sell it)
Real-World Example: What Emeka Pays (and Doesn't Pay)
In the same year, Emeka:
- Sold his Toyota Camry for ₦5.2 million (bought for ₦8.5 million three years ago)
- Sold MTN shares for ₦7.5 million (bought for ₦5 million)
- Sold a plot of land for ₦20 million (bought for ₦12 million)
CGT calculation:
- Car sale: ₦0 CGT (private vehicles exempt, even if sold at profit)
- Shares sale: ₦0 CGT (stocks and shares completely exempt—₦2.5M profit is tax-free!)
- Land sale: ₦8 million gain × 10% = ₦800,000 CGT due
Emeka only pays CGT on the land. The car and shares are completely exempt, even though he made ₦2.5 million profit on the shares.
How to Calculate Your Capital Gains Tax
The CGT formula is actually quite simple. Here's the step-by-step breakdown:
Step 1: Calculate Your Capital Gain
Capital Gain = Sale Proceeds - (Purchase Cost + Allowable Expenses)
Sale proceeds = What you received from the buyer (minus selling costs)
Purchase cost = What you originally paid for the asset
Allowable expenses include:
- Legal fees (at purchase and sale)
- Agent/broker commissions
- Survey and valuation costs
- Registration and documentation fees
- Cost of improvements (renovations, extensions, not maintenance)
Step 2: Apply the CGT Rate
CGT = Capital Gain × 10%
The current CGT rate is a flat 10% for everyone—individuals and companies pay the same rate.
Detailed Calculation Example: Adebayo's Property Sale
Let's work through Adebayo's situation from the introduction:
Purchase details (2018):
- Property price: ₦25,000,000
- Legal fees at purchase: ₦500,000
- Total acquisition cost: ₦25,500,000
Sale details (2024):
- Sale price: ₦45,000,000
- Agent commission (3%): ₦1,350,000
- Legal fees at sale: ₦450,000
- Total disposal costs: ₦1,800,000
CGT calculation:
- Net sale proceeds = ₦45,000,000 - ₦1,800,000 = ₦43,200,000
- Capital gain = ₦43,200,000 - ₦25,500,000 = ₦17,700,000
- CGT at 10% = ₦1,770,000
Adebayo must pay ₦1,770,000 to NRS within 30 days of completing the sale.
Note: Adebayo also pays stamp duty separately. Under the Finance Act 2020, for properties up to ₦50 million, stamp duty is 0.78%. Since his property sold for ₦45 million, stamp duty is ₦351,000 (0.78% of ₦45 million), bringing his total tax bill to about ₦2.121 million. This is why understanding both taxes is crucial for sale planning.
Special Situations You Need to Understand
Your Primary Residence: The Most Valuable Exemption
If you sell the home where you actually live—your principal private residence—you pay no CGT under Section 38 of the CGTA.
But there are important conditions:
• It must be your only residence (you can't claim two homes as "primary") • You must have actually lived there (not just owned it) • You can only claim this exemption for one property at a time
Example: Okonkwo's Primary Residence Sale
Mrs. Okonkwo bought her home in Lekki for ₦18 million in 2019. She's lived there continuously for five years. In 2024, she sells it for ₦32 million—a ₦14 million gain.
CGT calculation:
- Capital gain: ₦14,000,000
- CGT at 10%: ₦1,400,000
- Less: Primary residence exemption: (₦1,400,000)
- CGT payable: ₦0
Mrs. Okonkwo pays no CGT because this qualifies as her principal private residence. However, she still pays stamp duty on the transfer—the exemption only applies to CGT.
Important: If you own multiple properties, only your main home qualifies. Your beach house in Badagry, your rental property in Surulere, or your "weekend home" in Ibadan are all taxable when you sell them.
Inherited Property: Understanding the Rules
When Chief Bello's father passed away in 2020, he inherited a property worth ₦30 million at that time. The inheritance itself was CGT-free under Section 22.
But in 2024, Chief Bello sells that property for ₦48 million. Now CGT applies:
CGT calculation:
- Sale price: ₦48,000,000
- Agent fees: ₦1,440,000
- Acquisition cost: ₦30,000,000 (market value at date of inheritance, NOT what his father originally paid)
- Capital gain: ₦48,000,000 - ₦1,440,000 - ₦30,000,000 = ₦16,560,000
- CGT due: ₦1,656,000
Key lesson: For inherited property, your "purchase cost" is the property's market value on the date you inherited it. This is why you should get a professional valuation when you inherit property—you'll need it for CGT calculation when you eventually sell.
Gifts Between Family Members
Mr. Emeka wants to gift a rental property to his son. Under Section 22, gifts between family members (spouse, children, parents) are exempt from CGT at the time of the gift.
However, there's a crucial detail: The son "inherits" his father's original acquisition cost.
Example:
- Father's original purchase cost (2015): ₦15,000,000
- Gift to son (2022): No CGT due
- Son sells property (2024): ₦28,000,000
Son's CGT calculation:
- Sale price: ₦28,000,000
- Acquisition cost: ₦15,000,000 (father's original cost, not market value at gift date)
- Capital gain: ₦13,000,000
- CGT due: ₦1,300,000
The gift was tax-free, but the son still pays CGT on the full appreciation from his father's original purchase price when he sells.
When and How to Pay CGT
Critical Deadlines
You must pay CGT within 30 days of disposing of the asset OR by June 30 of the year of assessment, whichever is earlier, per Section 42 CGTA.
Let's make this practical:
• If you sell on March 15, 2024: Payment due by April 14, 2024 (30 days is earlier) • If you sell on January 20, 2024: Payment due by February 19, 2024 (30 days is earlier) • If you sell on December 10, 2024: Payment due by January 9, 2025 (30 days from sale, earlier than June 30, 2025)
These deadlines are strictly enforced. Don't wait for NRS to remind you—they won't. The law assumes you know your obligations.
Penalties for Late Payment
If you miss the deadline:
• Fixed penalty: ₦25,000 for failure to file returns (Section 50 CGTA as amended by Finance Act 2019) • Interest charge: 10% per annum on the unpaid tax from the due date until you pay
For example, if you owe ₦1 million CGT and pay three months late, you'll pay:
- Original tax: ₦1,000,000
- Fixed penalty: ₦25,000
- Interest (3 months at 10% p.a.): ₦25,000
- Total: ₦1,050,000
The interest compounds, so the longer you delay, the more expensive it becomes.
How to File and Pay
Step 1: Calculate your CGT using the formula above
Step 2: Complete CGT Form (Form CGT01 available on NRS website)
Step 3: Gather supporting documents:
- Original purchase agreement/receipt
- Sale agreement/deed of assignment
- Receipts for legal fees, agent commissions
- Evidence of improvements (if claiming these costs)
- Survey and valuation reports
Step 4: File at NRS
- Visit your nearest NRS Tax Office (find locations on www.firs.gov.ng)
- OR use NRS online portal (TaxPro-Max) for electronic filing
Step 5: Make payment
- Pay through designated banks
- Request for official receipt
- Keep receipt for your records (you may need it for property documentation)
Pro tip: Start this process BEFORE completing your sale. Some buyers require proof of CGT clearance before final payment, and you don't want to scramble at the last minute.
Common Mistakes to Avoid
Mistake 1: Confusing Gross Sale Price with Capital Gain
Wrong calculation: "I sold for ₦50 million, so I owe ₦5 million CGT (10% of ₦50M)"
Correct approach: CGT is 10% of your GAIN (profit), not the sale price. If you bought for ₦40 million, your gain is ₦10 million, and CGT is ₦1 million.
Mistake 2: Forgetting to Deduct Allowable Expenses
Fatima sold land for ₦30 million that she bought for ₦20 million. She calculated ₦10 million gain and paid ₦1 million CGT.
But she forgot to deduct:
- Survey fees: ₦200,000
- Legal fees at purchase: ₦400,000
- Agent commission at sale: ₦900,000
- Legal fees at sale: ₦300,000
Correct calculation:
- Sale proceeds: ₦30,000,000 - ₦900,000 - ₦300,000 = ₦28,800,000
- Acquisition cost: ₦20,000,000 + ₦200,000 + ₦400,000 = ₦20,600,000
- True gain: ₦28,800,000 - ₦20,600,000 = ₦8,200,000
- Correct CGT: ₦820,000 (she overpaid ₦180,000!)
Always keep receipts for all costs related to buying, improving, and selling the asset. These reduce your tax bill legally.
Mistake 3: Assuming All Property Sales Are the Same
Tunde owns three properties:
- His family home in Ikeja (where he lives)
- A rental apartment in Victoria Island
- A holiday home in Calabar
He thinks because he owns them all, they're all "personal" and exempt. Wrong.
Only the Ikeja home (principal private residence) is CGT-exempt. The rental apartment and holiday home are both taxable when sold because he doesn't live in them as his primary residence.
Mistake 4: Thinking Stamp Duty Covers CGT
"I already paid stamp duty at the land registry, so I'm done with taxes."
No. Stamp duty and CGT are separate taxes:
- Stamp duty goes to NRS (through banks) and taxes the transfer document
- CGT goes to NRS and taxes your profit
You must pay both. Your lawyer should guide you through both, but ultimately, it's your responsibility.
Mistake 5: Not Planning for CGT Before Selling
Many people discover their CGT obligation after spending all the sale proceeds. Then they scramble to find money for tax payment, sometimes borrowing at high interest rates.
Smart approach: Calculate estimated CGT before you sell. Set aside that amount immediately when you receive payment. Better yet, negotiate with the buyer that they pay directly to NRS on your behalf (this is becoming common practice).
Frequently Asked Questions
Q: Do I pay CGT on my car when I sell it?
No. Private motor vehicles are specifically exempt under Section 31 of the CGTA. You don't pay CGT on your personal car, whether you sell at profit or loss. This exemption doesn't apply to commercial vehicles or cars used in business.
Q: What if I sell at a loss—do I still pay CGT?
No. CGT applies only to gains (profits). If you sell for less than you paid, there's no capital gain to tax. However, you cannot offset capital losses against other income or even against other capital gains in Nigeria—losses just disappear.
Q: I sold property in 2022 but haven't paid CGT. What should I do?
File and pay immediately. While you'll face penalties (₦25,000 fixed + 10% interest per annum), voluntary disclosure before NRS discovers the default usually results in better treatment than if they catch you first. The interest keeps accumulating, so act quickly.
Q: Can I avoid CGT by not registering the property transfer?
Terrible idea. First, it's illegal—tax evasion is a criminal offense. Second, NRS now cross-references State Land Registry data with tax records. Third, the buyer can't properly own the property without proper documentation, creating legal problems for both of you. Always file and pay CGT properly.
Q: Do foreigners pay CGT in Nigeria?
Yes. Anyone disposing of assets situated in Nigeria pays CGT, regardless of nationality or residence. If you're a non-resident selling Nigerian property, you still pay 10% CGT to NRS.
Q: How does NRS know I sold my property?
NRS receives information from:
- State Land Registries (property transfer records)
- Banks (large transaction reporting)
- Stamp Duty payment records
- Professional bodies (lawyers, estate agents)
- Third-party information exchange agreements
Enforcement has significantly increased since 2020. Don't assume NRS won't find out—they likely will.
Key Takeaways
• CGT is 10% of your profit (capital gain), not the sale price. Calculate: Sale proceeds minus (purchase cost + allowable expenses) × 10%.
• Many personal items are exempt: Your primary residence (only one), personal car, stocks and shares, and gifts between family members don't attract CGT.
• You must pay within 30 days of selling or by June 30 of the assessment year, whichever is earlier. Late payment costs ₦25,000 penalty plus 10% annual interest.
• CGT and stamp duty are different taxes—you pay both on property sales. CGT taxes your gain; stamp duty taxes the document transfer.
• Keep detailed records of all purchase costs, improvements, and selling expenses. These receipts reduce your taxable gain and are your evidence if NRS questions your calculation.
What to Do Next
If you're planning to sell property or have recently sold:
Immediate actions:
• Calculate your estimated CGT using the formula in this guide. Don't wait until after the sale.
• Gather all documentation: Purchase agreements, receipts for improvements, legal fees, survey costs, agent commissions.
• Set aside 10-15% of your expected profit for CGT and stamp duty combined. Don't spend this money.
• Download Form CGT01 from the NRS website (www.firs.gov.ng) and familiarize yourself with the information required.
Within 7 days of sale:
• Complete your CGT computation with actual sale figures and all allowable expenses.
• Complete Form CGT01 with all required supporting documents.
• Visit your nearest NRS office or file online through TaxPro-Max. Get help from NRS staff if needed—they're there to assist.
Before the 30-day deadline:
• Make payment through designated banks and collect official receipt.
• File your receipt with your property documents—you may need CGT clearance for future transactions.
• Keep copies of everything: forms, receipts, calculations, correspondence with NRS.
Pro tip: If you're selling property worth several million naira, consider engaging a tax consultant for the filing. The cost (usually ₦50,000-150,000) may be deductible for income tax purposes if the property was a business asset, though it does not reduce your capital gain calculation. The consultant can help you avoid costly mistakes or penalties.
Remember, CGT compliance is not optional—it's a legal requirement. But with proper planning and understanding, it's manageable. The key is starting early, keeping good records, and meeting deadlines.
Need help with CGT calculation or filing? NRS operates a taxpayer helpline and support desk at all tax offices. Don't hesitate to ask questions—it's far better to get it right the first time than to face penalties and interest later.