Capital Gains Tax in Nigeria: What's Taxed at 10%

What is Capital Gains Tax?

Capital Gains Tax (CGT) is a 10% tax on the profit you make when selling or disposing of capital assets. It's separate from income tax and has its own rules.

What's Subject to CGT?

Taxable Assets

• Land and buildings
• Shares and securities
• Goodwill
• Options and rights
• Business assets
• Intellectual property

Exempt Assets

• Motor vehicles
• Personal effects (jewelry, art, household items)
• Nigerian government securities
• Life insurance policies
• Decorations for valor

The Important Exemptions

1. Principal Private Residence

If you sell your main home and reinvest the proceeds in another home within 1 year, no CGT is payable.

2. Stock Market Gains (Historically)

Gains from selling shares on the Nigerian Stock Exchange have been exempt in some periods. Check current rules.

3. Agricultural Land

Disposals of agricultural land may be exempt under certain conditions.

How to Calculate CGT

Basic Formula

CGT = (Proceeds - Cost - Allowable Deductions) × 10%

Allowable Deductions

• Purchase price of the asset
• Improvement costs (not maintenance)
• Legal fees on acquisition and disposal
• Estate agent/broker fees
• Stamp duties

Example

Property Sale

• Sale price: ₦50,000,000
• Purchase price: ₦20,000,000
• Improvements: ₦5,000,000
• Legal fees (buy + sell): ₦2,000,000
• Agent fees: ₦1,500,000

Calculation:

• Gain = ₦50M - ₦20M - ₦5M - ₦2M - ₦1.5M = ₦21,500,000
• CGT = ₦21,500,000 × 10% = **₦2,150,000**

Timing of Payment

CGT is payable when:

• The asset is sold
• The asset is exchanged
• The asset is gifted
• A lease is assigned for a premium

Due date: Within 30 days of the transaction or on filing your annual return.

Special Situations

Part Disposal

If you sell part of an asset (e.g., portion of land), calculate the cost proportionally.

Gifts to Relatives

Gifts to connected persons are treated as sales at market value. CGT may apply.

Inherited Assets

When you inherit an asset, your "cost" for CGT purposes is the market value at date of death.

Company Shares

Gains from selling company shares are generally taxable, but:

• May be exempt if shares are listed and held long-term
• Different rules for foreign shares

Record Keeping

For CGT purposes, keep:

• Purchase agreements and receipts
• Evidence of improvement costs
• Professional fee invoices
• Sale agreements

Important: Keep records forever for assets - you may not sell for decades.

Common Planning Strategies

1. Use exemptions: Principal residence, annual exemption

2. Time disposals: Spread sales across tax years

3. Claim all costs: Don't miss allowable deductions

4. Consider transfers to spouse: May defer CGT

Conclusion

CGT at 10% is relatively low, and with proper planning and full use of exemptions, your liability can be minimized. The key is good record-keeping from the moment you acquire an asset.

Use our Capital Gains Calculator to estimate your CGT.