Real Estate Taxes: A Beginner’s Guide

Real estate taxes are a necessary requirement that all property owners have to consider.. These taxes vary from country to country with some countries requiring higher taxes than others.

This is the case in West Africa, where Ghana and Nigeria have similar real estate tax requirements, with a few additional taxes required in Nigeria.

Here is a list of some of the taxes that apply in both countries.

Capital Gains Tax
This is the tax that applies to the profit made from the sale of any asset, including real estate. In Nigeria, the rate is 10% and it is only charged on the disposal of property that is not a private residence. In Ghana the tax is 15% of the gains made when it is higher than GHC500.

Value Added Tax
In Nigeria, all goods and services are subject to a 7.5% VAT but this doesn’t apply directly to real estate, only in the course of miscellaneous transactions that may occur during a real estate transaction, such as legal and agency transactions.
The same applies in Ghana where the VAT is 12.5% but for real estate developers it is much lower at 5%. This was introduced in 2015 when the government planned to charge 17.5% but reduced it to the current rate.

Property Tax
In Ghana the law stipulates that all properties in a certain zone are to pay tax depending on the valuation of each zone. So properties in different zones attract different property taxes. The value of a property also adds to the tax it attracts, so a property in a zone can incur higher taxes if said property has a higher value than the other properties in the area.

In Nigeria, the property tax also differs from state to state, where different states use different taxes for property. In Lagos, it is called the Land Use Charge. This is paid annually to the state government as all land in the state is owned by the state, which leases the land on which the property is built to the property owner.