Many Nigerians assume that selling a personal asset such as a house, car, or valuable possession is automatically tax-free. However, the Nigeria Tax Act (NTA) 2025 introduces specific conditions, thresholds, and limits that determine whether gains from such sales are exempt from tax or included in an individual’s taxable income.
The changes are part of a broader overhaul of Nigeria’s tax system that seeks to simplify tax administration and align the treatment of gains with the wider income tax framework. According to a PwC publication titled ‘Changes to expect for individuals, family businesses, and small businesses,’ the new law introduces limits on exemptions for principal private residences, personal chattels, and motor vehicles while also changing how gains are taxed.
Tomi Akinwale, a tax professional, noted that gains from the sale of personal assets can have tax implications, although not every gain will be taxable.
“Thresholds matter, and context determines the tax outcome,” he said.
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Can you sell your home without paying tax?
One of the most significant reliefs under the Act relates to a person’s principal residence.
Section 51 of the Nigeria Tax Act exempts gains arising from the disposal of a dwelling house and up to one acre of adjoining land, provided the land is not used for commercial purposes.
At first glance, this appears to provide a broad exemption for homeowners. However, the law places important restrictions on who can benefit and how often. The exemption can only be enjoyed once during an individual’s lifetime. This means a taxpayer who has already claimed the relief on the sale of a qualifying residential property may not be able to claim it again on the sale of another home.
The law also recognises that some properties serve both residential and commercial purposes. Where a property is used partly as a dwelling and partly for business activities, the gain must be apportioned, meaning only the residential portion may qualify for the exemption.
Similarly, where only part of a qualifying property is sold, the consideration must be apportioned accordingly. According to PwC, these provisions introduce clearer limits to what was previously perceived by many taxpayers as a blanket exemption for residential property disposals.
What happens when you sell personal belongings?
Another area where taxpayers may need to pay closer attention is the disposal of personal chattels.
Personal chattels generally refer to tangible movable property owned by an individual, such as jewellery, artworks, household items, collectibles, and other personal possessions.
Under Section 52 of the Act, gains from the disposal of such assets are exempt only where the total consideration does not exceed N5 million or three times the annual national minimum wage, whichever is higher.
This represents a significant increase from the threshold under the old Capital Gains Tax Act, which provided a much lower exemption threshold of N1,000 for personal and domestic effects.
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The provision means that while ordinary personal transactions may remain outside the tax net, higher-value disposals could attract tax implications depending on the amount involved. The law also contains anti-avoidance measures designed to prevent taxpayers from splitting transactions into smaller disposals to remain below the threshold. Where multiple assets are sold to the same person, connected persons, or persons acting together, the transactions may be treated as a single disposal for tax purposes.
Are gains from selling your car taxable?
The Act also provides a specific exemption for private vehicles. Section 53 states that a motor vehicle used solely for private or non-profit purposes shall not be treated as an asset for the purposes of calculating gains under the relevant provisions of the law.
However, the exemption is not unlimited. The law restricts the relief to no more than two motor vehicles disposed of by an individual in a year of assessment. This means an individual selling one or two privately used vehicles in a year may benefit from the exemption. Additional disposals beyond that threshold may attract closer scrutiny from tax authorities. Akinwale explained that the provision offers relief for genuine personal-use vehicles while discouraging repeated disposals that may resemble commercial trading activities.
Why are these changes being introduced?
The reforms reflect the government’s broader effort to strengthen revenue mobilisation and close loopholes in the tax system.
PwC noted that the new framework aligns the taxation of gains more closely with the wider income tax regime and reduces opportunities for tax arbitrage. For individuals, the practical implication is that understanding the nature of an asset, the applicable exemption, and the value of the transaction has become increasingly important. Taxpayers can no longer assume that every personal asset sale automatically qualifies for relief.
What taxpayers should do before selling an asset
Experts say proper documentation is becoming more important under the new framework. Individuals planning to dispose of high-value assets should keep records relating to Acquisition costs, renovation or improvement expenses, valuation reports, sale agreements, and
Other transaction-related documents. Such records may become important in determining whether a gain qualifies for exemption and, where tax applies, how much tax is payable.
The Nigeria Tax Act 2025 preserves important exemptions for genuine personal-use assets, but it also introduces clearer rules and limits around who qualifies and under what conditions.
For homeowners, the principal private residence exemption remains available, although it can only be used once in a lifetime. For personal belongings, the value of the transaction matters. For vehicle owners, the exemption is limited to two private vehicles in a year.
As Nigeria moves towards a more integrated approach to taxing gains, individuals planning to sell valuable assets may need to pay closer attention to the tax implications before concluding a transaction.
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