The Nigerian Tax Act 2025 has ushered in significant changes to the real estate sector, with the aim of boosting revenue, promoting transparency, and enhancing compliance. These changes have far-reaching implications for real estate appraisal, which plays a crucial role in determining the value of properties. Let’s delve into the key changes and benefits for real estate appraisal.
One of the most notable changes brought about by the Nigerian Tax Act 2025 is the overhaul of Capital Gains Tax (CGT) rates. Companies now face an increased CGT rate of 30%, up from 10%, while individuals are subject to a progressive rate of 15-25%. However, sales under ₦150 million are exempt from CGT, providing a benefit to smaller investors in the real estate sector. This change may have implications for the valuation of properties, as investors assess the tax implications of their transactions.
Additionally, the removal of Value Added Tax (VAT) on property sales is a welcome change that will reduce transaction costs and boost affordability in the real estate market. This could lead to increased property transactions and a more active market, which may impact property valuations.
Rent relief measures introduced under the Nigerian Tax Act 2025 allow tenants to deduct up to ₦200,000 or 20% of annual rent from taxable income. This could ease rental burdens on tenants and make housing more affordable, potentially driving demand for rental properties and affecting rental valuations.
The introduction of a tenor-based Stamp Duty structure and the implementation of a 10% Withholding Tax (WHT) on rent also have implications for real estate appraisal. Appraisers will need to consider these tax implications when valuing properties, as they may impact the overall value of the property.
In terms of benefits for real estate appraisal, the changes brought about by the Nigerian Tax Act 2025 promote increased transparency, improved compliance, affordability, and investment incentives. Digitalization of tax reporting and property data reduces fraud and enhances investor confidence, while stricter reporting and documentation requirements promote accountability in the real estate sector. Exemptions and deductions encourage investment in affordable housing and free trade zones, stimulating growth in the real estate market.
The Nigerian Tax Act 2025 is set to create a more transparent and formal real estate market, benefiting investors and the economy. Real estate appraisers play a crucial role in navigating these changes and providing accurate valuations in this evolving landscape. Stakeholders in the real estate sector must stay informed and adapt to these new regulations to capitalize on the opportunities presented by the Nigerian Tax Act 2025.