UNIT 14

CAPITAL GAINS TAX

Capital gains tax (CGT) is a tax on the profit made from the sale of property or assets. Under Nigerian law, CGT is governed by the capital gains tax act (CGTA) 2004. This tax is applicable to the profit derived from the sale or disposal of capital assets, including land and buildings. However, certain transactions are exempt from CGT under the CGTA. For instance, gains from the sale of a primary residence are generally exempt, provided specific conditions are met. See the case of Ogunyemi v. Federal Board of Inland Revenue (2001) 3 NWLR (Pt. 699) 289 where the court highlights issues related to the assessment and collection of CGT. The court examined the calculation of capital gains and the applicability of exemptions.

PROPERTY TAX

Property tax is a tax imposed on property ownership, including land and buildings. It is usually levied by local government authorities. Property tax rates and regulations can vary depending on the jurisdiction within Nigeria. Property tax is typically assessed based on the value of the property. Local government authorities are responsible for the collection of property taxes, and they may use various methods, including self-assessment by property owners and periodic valuation by government-appointed valuers. See the property and land use charge law where various states in Nigeria have their own property and land use charge laws. For example, the Lagos state land use charge law which governs property tax in Lagos state, outlining the assessment, payment, and enforcement of property tax. See also the case of Bodunde v. Lagos State Government (2018) 3 NWLR (Pt. 1605) 469 where the court involved a dispute over the assessment of property tax under the Lagos state land use charge law. The court’s decision clarified the principles of fair assessment and the rights of property owners.

LAND USE CHARGES

Land use charges are specific taxes related to the use of land, including both residential and commercial properties. These charges are designed to cover the cost of public services and infrastructure related to land use. Land use charges must be paid in accordance with the provisions of the applicable law. Failure to pay may result in penalties or enforcement actions by local authorities, including property seizures or legal action. See the land use charge law where each state may have its own land use charge law. For example, the Lagos state land use charge law which provides the framework for assessing and collecting land use charges. See also the case of Afolabi v. Lagos State Government (2014) 5 NWLR (Pt. 1398) 487 where the court addressed the legality and enforcement of land use charges. It provided insight into the application of the law and the rights of property owners.

KEY CONSIDERATIONS ON PROPERTY TAXATION

1. Valuation: Accurate valuation of property is crucial for determining the amount of tax payable. Valuations should be conducted by qualified professionals to ensure fairness and compliance with legal standards.
2. Exemptions and reliefs: Certain exemptions and reliefs may apply to reduce the tax burden on property owners. It is important for property owners to be aware of these exemptions to minimize their tax liability.
3. Legal recourse: Property owners have the right to challenge unfair tax assessments or disputes with tax authorities through legal channels. Courts may review the assessments and provide relief if the tax is deemed excessive or incorrectly calculated.

CONCLUSION

Property law taxation in Nigeria involves various taxes, including capital gains tax, property tax, and land use charges. Each tax has its own legal framework, assessment procedures, and exemptions. Understanding these aspects is essential for compliance and effective property management. Key statutes and cases provide guidance on the application and enforcement of these taxes, ensuring that property owners and investors are well-informed about their tax obligations.