How Nigeria’s New Tax Law Will Reshape Real Estate Financing from 2026

Nigeria Enters a New Tax Era

Come January 2026, Nigeria’s property market will experience a major fiscal shift as the Nigeria Tax Act 2025 comes into effect. The new law aims to align the country’s tax structure with international best practices, boost government revenue, and tighten compliance across key sectors — including real estate and housing finance.

Experts, however, warn that while the reform could promote transparency and efficiency, its success will depend on consistency, stakeholder engagement, and how effectively tax proceeds are reinvested into the economy.

“If tax revenues are directed toward mortgage financing, infrastructure, and land administration reforms, the long-term benefits could outweigh the short-term pain,”

— Industry analysts told The Guardian.

Broader Compliance, Tighter Oversight

[Image Suggestion: A real estate developer reviewing blueprints in a modern office — Caption: “Developers and investors brace for tighter financial oversight under the new tax regime.”]

The Act introduces a range of new compliance rules, including a “top-up tax” on multinationals, stricter Controlled Foreign Company (CFC) provisions, and updated definitions for capital gains.

Although these measures primarily target multinational corporations, their ripple effect will reach real estate investors and developers who use offshore Special Purpose Vehicles (SPVs) to finance large-scale projects. The Federal Inland Revenue Service (FIRS) will now exercise greater scrutiny over cross-border transactions, potentially increasing the cost of doing business for foreign-backed developments.

“The law enhances transparency but also raises effective tax rates. Some investors may rethink their exposure or restructure financing to stay competitive,”

— A senior tax consultant noted.

Stamp Duties and Luxury Property Tax

[Image Suggestion: High-rise apartments in Ikoyi — Caption: “Luxury districts such as Ikoyi and Maitama are expected to feel the biggest impact of the new property tax provisions.”]

One of the most debated aspects of the Act is the adjustment of stamp duties on property transactions. Leases above ₦10 million will attract higher duties, while smaller residential leases remain exempt.

The reform also proposes a 1.5% annual luxury property tax on high-end real estate in prime areas like Banana Island, Ikoyi, Maitama, and Asokoro. Supporters say the move will enhance fairness, while critics warn it could distort pricing in the luxury segment without addressing Nigeria’s wider housing affordability crisis.

“Authorities should tax completed but idle luxury homes, not mid-range housing. The focus must remain on affordability,”

— Olufemi Oyedele, Estate Valuer.

Mixed Fortunes for Developers and Lenders

[Image Suggestion: Construction site with cranes and concrete mixers — Caption: “Developers may face higher project costs as taxes and levies increase in the short term.”]

The banking and mortgage industries are re-evaluating their lending models in light of the new tax structure. Analysts expect that higher transaction levies and corporate taxes may initially raise borrowing costs and restrict liquidity.

However, some experts remain optimistic that increased government revenue could strengthen housing finance — if reinvested strategically.“The VAT exemption on residential properties is a welcome relief,” said Ayo Ibaru, CEO of Northcourt.

“Developers can now recover VAT paid on construction materials and services, which improves cash flow and reduces project stress.”

The Real Estate Investment Trust (REIT) market also faces uncertainty. While REITs currently enjoy tax exemptions, regulatory ambiguity under the new Act could unsettle investors unless the FIRS issues clear guidance.

Opportunities Hidden in the Reform

[Image Suggestion: Modern estate community in Abuja — Caption: “Experts say reforms could drive more structured, transparent investments if properly implemented.”]

Industry leaders like Dr. Roland Igbinoba, President of Proptech Nigeria, see the reform as both a challenge and an opportunity:

“The new tax regime will reshape not just property development costs but the entire ecosystem. It recognises double tax treaties, which is a game changer for foreign investors,”

— Igbinoba said.

He added that while the Capital Gains Tax (CGT) has increased from 10% to 30%, developers can offset some of the impact through strategic structuring and professional advisory support.

Igbinoba also noted that rental income from both residential and commercial properties remains VAT-exempt, and the broadened input VAT recovery provision will benefit serious developers.

The Need for Transparency and Collaboration

[Image Suggestion: Meeting between government officials and real estate professionals — Caption: “Experts urge ongoing dialogue between regulators and developers to ensure smooth implementation.”]

Analysts agree that digital integration and stakeholder engagement will determine how effectively the new tax regime supports real estate growth. FIRS is already digitising valuation systems and linking state land registries to improve property transaction tracking.

“Regular stakeholder engagement, transparency, and a dedicated Real Estate Tax Tribunal are essential to manage disputes and maintain confidence,”

— Ibaru advised.

Oyedele added that a monitoring department within the Federal Ministry of Housing and Urban Development should be established to evaluate how new taxes affect property values and investment flows.

Bottom Line: A Test of Execution

The Nigeria Tax Act 2025 presents both a challenge and a catalyst for reform. While developers and investors may face higher short-term costs, experts believe the law could ultimately lay the foundation for a more transparent, mortgage-driven, and globally competitive real estate market by the end of the decade.