How Nigeria’s tax law reshapes property inheritance

Property inheritance in Nigeria has largely been treated as a family and legal process, shaped by wills, customary practices, and probate procedures, but this has changed.
The Nigeria Tax Act (NTA) 2025 brings inheritance, particularly real estate transfers, more firmly within the tax system, setting clearer rules on how income, gains, and estate administration are treated.

While Nigeria still does not impose a direct inheritance tax, inheriting property is no longer entirely outside the reach of tax authorities. Income earned during probate, gains from future sales, and compliance obligations for executors are now more clearly defined.

This shift means families and property owners must pay closer attention to the tax implications of transferring wealth across generations.

This explainer outlines where taxes apply, what has changed, and the implications for families and property investors.

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Inheritance is not taxed, but related income is
Nigeria does not impose a standalone inheritance tax, and that remains unchanged under the new law. However, inherited property is not entirely tax-free.

Income linked to inherited assets and gains from their eventual disposal may still be taxed, shifting inheritance from a purely administrative process to one with clearer financial consequences.

Andersen, in their article Family Wealth Transfers and the Nigeria Tax Act 2025, notes that “Inheritance is no longer just about who gets what, but also about what the tax authority gets first.”

Tax treatment of income during probate
The law provides clearer guidance on how income generated after death is treated. Under Section 24(4) of the NTA, income received after death is deemed to accrue to the deceased.

In contrast, income generated during estate administration is taxed in the hands of the executor or allocated to beneficiaries.

In practical terms, rental income or other earnings from property before distribution may be subject to tax. Executors are responsible for settling both the deceased’s final tax liabilities and any income earned during the administration period.

Delays in probate can increase tax exposure, as estate income remains taxable until assets are distributed.

Capital gains on inherited property
Inheritance itself does not trigger Capital Gains Tax, but the tax applies when inherited property is eventually sold.

The law provides clearer guidance on how gains should be calculated. In many cases, the value of the property at the time of inheritance can be used as the base cost, rather than the original purchase price by the deceased.

This reduces uncertainty around the taxation of inherited property and limits the risk of unexpected tax bills when beneficiaries decide to sell.

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Lower transaction costs from VAT changes

One of the more immediate impacts of the reform is the removal of Value Added Tax (VAT) on property transactions. At a rate of 7.5 percent, VAT previously applied to certain services connected to property transfers, including legal and agency fees.

With VAT no longer applicable to land and building transactions, the cost of transferring inherited property is expected to decline, offering some relief to beneficiaries and estate administrators.

However, other charges remain. Stamp duties, title registration fees, and consent charges still apply and are administered at the state level, meaning costs and timelines may vary.

Trusts and anti-avoidance provisions
The new law places greater scrutiny on trusts and similar arrangements often used in estate planning. Rather than treating these structures as completely separate, tax authorities can now examine who truly controls or benefits from the assets.

Where a trust is effectively used to hold assets for its creator, income may be treated as belonging to that individual for tax purposes. In other cases, beneficiaries may be taxed when they receive income, while trustees may be liable where income is retained.

The law also strengthens the ability of tax authorities to challenge arrangements designed primarily to reduce tax liabilities, including undervalued transfers made before death or the use of offshore entities.
These provisions point to closer monitoring of how wealth is structured and transferred.

Implications for executors and families

The role of executors is becoming more demanding. Beyond managing the estate and distributing assets, they are expected to ensure that all tax matters are properly handled.

This includes identifying outstanding tax liabilities, keeping records of income generated during probate, and engaging with tax authorities before assets can be transferred.

In many cases, estate administration may not proceed smoothly without evidence that tax obligations have been settled. For families, this adds another layer to an already sensitive process and may require earlier engagement with legal and tax professionals.

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Cross-border considerations

Families with assets or beneficiaries in different countries may face more complex tax outcomes. The treatment of inherited income depends on where individuals are resident and where the income is generated.

Someone living in Nigeria may need to account for income from inherited assets abroad, while a non-resident may still be taxed on income linked to property located in Nigeria.

This overlap can expose the same income to tax in more than one jurisdiction, particularly where there are no effective agreements to prevent double taxation. Therefore, cross-border inheritance planning is now more important than ever.

A shift toward structured succession planning
The reforms encourage more deliberate estate planning, particularly among property owners and high-net-worth individuals.

Real estate has long been a major store of wealth in Nigeria, often transferred informally across generations. The new framework pushes families toward clearer documentation, better structured wills, and more careful planning around asset transfers.

This may involve reviewing existing arrangements, updating property records, and taking a more proactive approach to how assets will be passed on.

Implementation challenges remain
Despite the increased clarity provided by the law, practical challenges are likely to persist. Land administration remains under state control, and processes such as title transfers and consent approvals can still be slow.

Differences in state-level charges and procedures may also affect how smoothly inheritance transactions are completed. In addition, the expanded compliance burden may pose difficulties for executors who are not familiar with tax requirements.

 

The NTA 2025 does not introduce a direct inheritance tax, but it changes how inheritance is treated in practice.
By clarifying the taxation of estate income, tightening oversight of trusts, and removing VAT from property transactions, the law reshapes the financial and administrative side of inheritance.

For families and investors, the key takeaway is clear. Property inheritance is no longer just a legal process. It now requires careful planning and a clear understanding of tax obligations to preserve wealth and ensure smooth transfers across generations.