G. ELIAS
Can anyone (including foreigners) own and occupy real estate in your jurisdiction (including shares in property owning companies)? Are there any restrictions?
Companies incorporated in Nigeria, even where they are 100% owned by foreigners, can own and occupy real estate in Nigeria to the same extent as a Nigerian. The case law is at best unclear on the position of human individual foreigners and companies incorporated outside Nigeria. The latter issue is in practice not as important as may appear at first sight. Foreigners may own Nigerian companies 100%. Foreign individuals who want to own and occupy Nigerian real estate routinely take the simple expedient route of forming a Nigerian company, which they will own 100%, to hold the real estate.
Are there restrictions on lending for the purchase of real estate by foreign companies? If so briefly give an outline?
It is not clear that a foreign company can purchase real estate at all in Nigeria. Apart from that, there are no restrictions on lending that are peculiar to the purchase of real estate by foreign companies in Nigeria. The same lending rules apply whether the purchaser is foreign or Nigerian.
Buying
Please provide a short summary of the fees and costs (including tax) relating to buying real estate in your jurisdiction.
The key fees/costs are:
- Registration Fee, Consent Fee. 2%-4% of the assessed value in total, depending on the State where the land is located.
- Capital Gains Tax. 10% of the capital gain on the deal price.
- Stamp Duties. 1.5% of the deal price.
- Value Added Tax. 7.5% of (a) the rent payable under a business premises lease and (b) fees charged by professionals advising on any real estate transactions. (a) and (b) apart, real estate transactions are VAT-exempt.
- Withholding Tax. On rent only, at 10%.
- Real estate agents’ fees and lawyers’ fees. 5-10% of the deal price.
Owning
Are there taxes applicable to owning real estate and can the burden of the taxes be passed to someone else (e.g. a tenant or an occupier - not being the owner
Yes. Real estate taxes go by various names (e.g. land use charges, neighbourhood improvement charges, ground rent, tenement rates) and are levied by the government of the state where the land is located.
State laws specify the person to pay the taxes. For example, in Lagos State, the owner is liable to pay on a lease less than 10 years, but for leases above 10 years, the occupier is liable to pay. The parties may contract that the burden of tax will fall differently, but such a contract binds only the parties, not the State.
Tax Breaks
Are there tax breaks or other incentives for foreigners to buy real estate in your jurisdiction? If so, what are they?
There are no specific incentives to foreigners to buy real estate in Nigeria. However, such foreigners may also be able to invoke more general Federal law incentives (e.g. obtaining a tax-free free trade zone status for the location; a Presidential order granting an exemption from paying companies income tax). Also, States statutes frequently empower States Governors to waive liability to pay States’ land taxes and building permits.
How is the ownership of Real Estate evidenced in your jurisdiction?
The ownership of real estate in Nigeria is primarily evidenced by (a) certificates of occupancy (basically long leases) granted by States Governors and (b) registered deeds of assignment issued by previous owners of the land. Other means of evidencing ownership include (i) farming and occupying the land, and (ii) purchase receipts from previous owners of cash paid to them.
Is it possible to keep the identity of owners of real estate confidential in your jurisdiction?
Yes. The practice varies by location. In, e.g., Lagos, the land title register is a public document that one can inspect on paying a small fee. Elsewhere, one can view documents on the land title register only with the owner’s permission. In the Federal Capital Territory, even with the owner’s permission all that one can get is an official summary by the Government of what it considers the register to disclose (but not an actual copy of the document registered). Everywhere, the owner may remain secret by letting a trustee/nominee be the sole owner of the property on the record.