For economic functionality, tax is a common source of revenue for governments worldwide. Nigeria’s fiscal system including tax payment plays a significant role in funding and managing the economic development and infrastructures.
Property tax in Nigeria started during the colonial era to fund public services and infrastructural developments. In this blog post, we discussed property tax payment in Nigeria and how it affects you as a property owner.
What is Real Estate Property Tax?
This referred to fees levied on property owners, remitted to the recognized authority based on the value of their property. It is an important source of revenue generation to the federal, state and local government of the country.
Nigeria property tax in federal capital territory payable annually is 0.3% for recreational property, 0.4% for residential property, 0.6% for commercial property and 0.7% for others.
Types of Property Tax in Nigeria
- Capital Gains Tax: This refers to tax levied on the profit made from the sale of a property. Its payment rate varies depending on the property type and location.
- Stamp Duty: This tax is payable on the transfer of property ownership from one party to another. The amount payable depends on the value of the property transferred.
- Rent Tax: This tax is levied on rental income generated from a property calculated based on the percentage of property rental fee.
- Development Levy: This tax is imposed on property owners to fund infrastructure development in the area based on the property’s assessed value.
Factors Determining Property Tax
There are various factors that determine the tax payable by property owners, they include:
- Assessed Value: The assessed value is the estimated market value of the property. The higher the assessed value of the property, the higher the property tax payable by the owner.
- Location: Property taxes also vary depending on the location of the property. It is determined by whether it is in prime areas with high property values to warrant higher tax rates.
- Property Type: Based on whether it is a residential, commercial, industrial property can also affect property tax rates.
- Property Usage: The way a property is used whether for residential purposes, business operations can influence tax rates.
- Property Age: Older properties may have lower property tax rates compared to newer properties.
- Property Improvements: Property improvements, such as renovations or additions, can increase the assessed value and, consequently, the property tax.
Conclusion
Being aware of the importance of property taxes will help owners better manage their tax obligations and plan for future property investments. At Novarick Homes and Properties Limited, we are not just a property selling company, we provide tips to our clients to help them manage their real estate properties.
We offer a range of services in property developments, property investment, property procurement and advisory, joint ventures, and facility management. Visit our website to explore actionable tips to make the most out of your real estate investment.
