The Tax Risks of Buying Property Abroad

Buying property in another country feels like a purely financial decision until the tax authorities on two continents remind you that it is not. The conversation around Nigerian investors purchasing overseas real estate has focused almost entirely on yields, entry prices and residency benefits. The question of what the Nigerian government, and the government of the target country, expects you to pay in tax on that investment has received far less attention. That gap is closing fast, and the buyers who discover it after the fact are discovering it at considerable cost. At TheHouse48, we believe every cross-border property decision needs to include the tax picture from the start, not as an afterthought.

The Rule That Changed Everything in 2026

The Nigeria Tax Act 2025, which took effect on January 1, 2026, introduced one of the most consequential changes to Nigerian tax law in a generation. Nigerian residents are now liable for tax on worldwide income, while non-residents are taxed only on Nigerian-sourced income. For property investors, this means that if a Nigerian resident owns property abroad or earns income from foreign sources, including real estate abroad, those incomes may now be taxable under Nigerian law, subject to certain allowances or double taxation treaties. The phrase most investors have not fully absorbed is the word resident. It no longer means simply someone who lives in Nigeria full-time.

What Residency Actually Means Now

Residence is no longer based solely on physical presence, as the Nigeria Tax Act 2025 now considers economic and familial ties as key factors in determining individual tax residence. This shift introduces new layers of complexity for Nigerians who live or work abroad but maintain economic or family ties in Nigeria. In practical terms, a person who spends fewer than 183 days in Nigeria and does not maintain substantial family, economic, or habitual ties there is more likely to be regarded as a non-resident. By contrast, a person who keeps strong ties through property, business activity, or a permanent home may still face Nigerian tax exposure even while living abroad. For a Nigerian based in London or Houston who owns a family home in Lagos, sends money to parents in Abuja and runs a business with Nigerian clients, the residency question is no longer straightforward. It is a legal determination that requires professional advice, not assumption.

The Country-Level Tax That Also Applies

Nigerian tax exposure is only one side of the equation. Every country where a Nigerian buys property applies its own tax framework to that investment, and the specifics vary enormously by market. In the UK, rental income from a British property owned by a non-resident is subject to UK income tax under the Non-Resident Landlord Scheme, with the basic rate of 20% applied to net rental profits after allowable expenses. In Spain, non-resident property owners pay a non-resident income tax on rental earnings at a flat rate of 24% for non-EU nationals, with an additional imputed income tax applied even on properties that are not rented out, based on a percentage of the cadastral value. In Turkey, rental income is subject to Turkish income tax at progressive rates, and capital gains on properties sold within five years of purchase are fully taxable. In Egypt, rental income is subject to Egyptian income tax, and while enforcement for foreign nationals has historically been inconsistent, compliance requirements exist and are becoming more structured as the country modernises its tax administration.

The Double Taxation Problem and Its Partial Solution

The risk that sits at the centre of this picture is paying tax on the same income in two countries simultaneously. Diaspora investors should pay close attention to double taxation agreements. Treaties between Nigeria and partner countries can reduce withholding tax burdens or offer credits that prevent income from being taxed twice across jurisdictions. There are provisions for foreign tax credit: if you paid tax abroad on foreign income, you may be able to offset it against Nigerian tax, reducing double taxation. Nigeria has active double taxation treaties with the UK, the Netherlands, South Africa, Canada, China, France, Belgium, Pakistan and Romania, among others. Buyers purchasing in countries without a treaty in force with Nigeria cannot rely on this mechanism and face the full exposure on both sides without offset.

The Capital Gains Dimension

Beyond rental income, the sale of an overseas property carries its own tax obligations that most investors do not model at the point of purchase. Gains from property disposals may be taxable, and exemptions often depend on the character and use of the property. In the UK, non-resident owners selling British residential property are liable for UK capital gains tax on any gain made since April 2015, regardless of where they live. In Turkey, gains on properties sold within five years of purchase are taxed in full under Turkish income tax rules. In Greece, a capital gains tax of 15% applies on the profit from property sales, though the rate has been subject to periodic suspension for qualifying transactions. For a Nigerian investor who purchased a Dubai apartment off-plan and sells it at completion for a profit, the UAE itself imposes no capital gains tax. But if they are classified as a Nigerian tax resident, that gain may now fall within the scope of Nigerian taxation under the 2026 framework.

TheHouse48 works with buyers who understand that international property investment is a cross-border legal and financial commitment, not just a real estate transaction. The tax picture in the country you are buying from matters as much as the tax picture in the country you are buying into, and in 2026, both pictures have changed in ways that make professional advice before purchase not optional but essential.