
Taxes are one of the ways through which the Government generates revenue to fulfill its responsibilities to the public, such as the provision of basic amenities and services. Taxes may be referred to as compulsory payments to the Government through any of its agencies. Taxes are payable on tangible assets such as cars and houses, and at the occurrence of particular events as with cash transfer or conclusion of a transaction. In a bid to diversify its source of revenue away from the oil sector, the Federal Government of Nigeria has focused on other sources and strategies, one of which is the imposition of new taxes and an increased compliance on those already in existence. The recently revamped stamp duties and instruments on which payments can be made is in line with this strategy.
The high value of real estate and high volume of transactions have led to it becoming one of the key areas where the new stamp duty regime is focused on. Instruments and documents such as Certificates of Occupancy (C of O), Joint Venture Agreements, Deed of Assignment, Power of Attorney, and Tenancy/Lease among others are now liable for Stamp Duty payment. The most significant of the stamp duty instrument introduced, by the nature of its popularity, is that on tenancy/leases which state that tenants are liable to pay a rate of 6% of their rent as Stamp Duty to the government. This represents an additional cost and may have ramifications on real estate transactions which are further examined.
Imposing a Stamp Duty on rents, depending on the tenure of the lease, increases the true cost of renting a property and in turn, increases the financial burden on the tenant. For the corporate tenants who leases multi-unit properties on the medium term and long term, the associated overhead cost of renting/leasing properties with the new Stamp Duty increases their recurring expenditure. This may lead to them considering owning their own property, as with ownership, they enjoy the intrinsic capital value from the property, which a lease does not have. Same may be applicable for individuals. With this, we may see an increase in demand for properties to be purchased than those to be leased.
High-end neighborhoods that already have a high vacancy rate like Ikoyi and Victoria Island in Lagos might not see any respite soon. The non-performance of the economy, borders closed to international travels (and by extension limited international trade) and the new taxes further increase the void rates of properties in these neighborhoods.
Before now, various tax laws have existed with little compliance to them, the machinery to ensure strict monitoring and compliance does not exist. The burden of remittance of the stamp duty to the coffers of the
Close to half of the world’s wealth is tied to real estate. It therefore, remains a veritable source of revenue for the government if properly exploited. The newly introduced Stamp Duty regime can significantly aid the government’s quest in this regard if properly exploited and appropriate measures put in place for harnessing it.
Source: NIESV Lagos State branch
You May also Like this
The pandemic may have brought drastic changes to our daily lifestyle, however...
Online real estate catalogues include virtual tours of sample flats to give...
There are two main schools of thought when it comes to :...
is one of the most dynamic industries that have seen some major transitions in...
For a long time now, real estate has been seen as a cash flow-generating...
With the economy fluctuating, more investors turn to the real estate market...
During this , social unrest and an upcoming election, a lot has...
In the “real” world, has historically been seen as a viable investment....
Understanding macroeconomic risk is critical to a successful strategy. While this form...
Illiquidity premium is the excess return an investor stands to earn in...
Adapt. Innovate. Accelerate. This is the mantra for any business right now...
wholesaling is a kind of arbitrage in which a party known as a wholesaler...
Months after the onset of Covid-19, we continue to see its impact...
Prospective buyers getting their first glimpse of potential homes through smartphone cameras...
The pandemic crisis has thrown nearly all industries for a loop, and...
What do Google, Microsoft, Facebook, Twitter, Visa and American Express all have...
The COVID-19 pandemic is having a transformative impact on (CRE) markets. The...
Your current financial stability doesn’t guarantee that you’ll be free from financial...
If you’re investing in property, you’ll need accurate real estate valuations to...
While the national faces significant uncertainty right now, it's important to recognize...
A myriad of publications have already pronounced office space a trend of...
The current pandemic and global response is a once-in-a-lifetime event that has...
New York, NY—With the shift towards buying an experience over buying a...
Passive income is an important factor in building wealth and achieving financial...
We've all seen studies on millennials circulating around the internet. As the...
I’m often asked what my preference is when comparing angel investing to...
Two popular avenues, real estate and bitcoin, have been making waves in...
Private real estate affords investors considerable control over their , from how...
Engaging the right attorney helps you avoid costly mistakes in deals. Especially...
The regulatory bodies in real estate include but are not restricted to the following;...
Deloitte’s 2020 Commercial Real Estate Outlook surveyed 750 owners, operators and investors in 10...
Most new investors in active real estate start with a traditional method...
Millions of Americans depend on cash flow generated by long-term investment portfolios,...
There is a common misconception that real estate investing requires property ownership....
Planners have charged the Lagos state government to do more detailed master...
The commercial real estate industry has entered a new phase of technology...
Buying a home is one of the most expensive decisions you'll ever...
Americans are spending less on home renovations than they were at this...
Are you thinking about purchasing your first piece of real estate? Investing...
Are you ready to invest in real estate? Real estate funds and real...
Real estate transactions often involve significant amounts of money. As a result,...
Investing in real estate is tremendously exciting, and can be very lucrative....
Ahmed Dangiwa, Managing Director, Federal Mortgage Bank of Nigeria (FMBN), said the...
Real estate markets trend between times of boom and bust, depending on a...
Malcolm Gladwell states that it takes 10,000 hours of practice to become...
Purchasing a home is a huge financial commitment, so finding the right...
The long-awaited overhaul of the National Urban Development Policy (NUDP) has been...
Everyone knows that retail is evolving, and common thought says that retail...
In cities, mixed-use real estate is hidden everywhere. Someone likely lives above...