Calculating Stamp Duty for Lagos Property: What Buyers and Sellers Must Know
Introduction
Stamp duty is one of the most critical yet misunderstood aspects of real estate transactions in Lagos. For every buyer, seller, investor, or property developer, understanding how to calculate and pay the correct stamp duty is not merely a matter of compliance—it is an essential step toward perfecting property ownership legally and protecting your title.
Many real estate disputes in Lagos arise because parties fail to properly stamp their Deed of Assignment, Deed of Lease, or other conveyancing instruments. The Lagos State Internal Revenue Service (LIRS) enforces strict rules, and any property document not duly stamped within the prescribed time is considered inadmissible in evidence and invalid for registration.
This article provides a complete, step-by-step explanation of how to calculate stamp duty for Lagos property transactions, including the applicable rates, legal basis, procedural requirements, examples, and consequences of non-compliance. It is designed for property buyers, sellers, real estate professionals, and diaspora Nigerians investing in Lagos property.
Understanding Stamp Duty in Nigerian Property Law
Stamp duty is a tax imposed on written or electronic documents that serve as evidence of transactions or legal relationships. In real estate, it applies to all instruments that transfer or create an interest in land or property.
The legal foundation for stamp duty in Nigeria is found in the Stamp Duties Act, Cap S8, Laws of the Federation of Nigeria 2004 (as amended). The law empowers the Federal Government to collect duties on instruments executed between a company and an individual, while State Governments collect duties on instruments executed between individuals.
In Lagos State, the authority for property-related stamp duty collection is vested in the Lagos State Internal Revenue Service (LIRS).
What Does “Stamping” Mean?
Stamping is the process of paying the appropriate duty on a document and having the document marked or endorsed by the tax authority to show that the payment has been made. The stamp (physical or electronic) confirms that the document is legally recognized for all purposes—especially for property registration and court admissibility.
Importance of Stamp Duty in Lagos Property Transactions
Stamp duty is not a mere bureaucratic requirement—it performs crucial legal and economic functions:
Validity of Title Documents: Only stamped instruments can be registered at the Land Registry.
Admissibility in Court: Unstamped documents are inadmissible as evidence in any court of law.
Government Revenue: Stamp duty contributes significantly to Lagos State’s internally generated revenue.
Property Authentication: It confirms that the transaction has passed through the proper channels.
Protection of Buyer’s Interest: Ensures that the buyer’s rights are legally enforceable against third parties.
Types of Property Documents Requiring Stamp Duty
Deed of Assignment
Deed of Lease or Sublease
Deed of Mortgage
Deed of Gift
Deed of Surrender
Contract of Sale (where executed)
Power of Attorney (where value is expressed)
Each of these documents attracts specific rates and must be properly stamped before use.
Stamp Duty Rate Structure in Lagos
Stamp duty rates depend on the nature of the transaction and the status of the parties involved. Below is the standard structure under the Stamp Duties Act and Lagos State practice:
| Transaction Type | Rate (Individuals) | Rate (Companies) |
|---|---|---|
| Deed of Assignment / Conveyance | 1.5% of consideration | 2% of consideration |
| Deed of Lease | 0.75% of annual rent | 1% of annual rent |
| Deed of Mortgage | 0.375% – 0.75% depending on term | 0.75% |
| Deed of Gift | 1.5% of market value | 2% |
| Power of Attorney (monetary) | 1% | 1% |
These rates are subject to periodic review by the government, and the calculation is typically based on the property’s consideration value or market value—whichever is higher.
How to Calculate Stamp Duty on Lagos Property
To calculate stamp duty correctly, you must know three essential variables:
Nature of the Instrument (Deed of Assignment, Lease, etc.)
Value of the Transaction (purchase price or market value)
Applicable Rate (as per law or government policy)
Example 1: Residential Property Sale
If a buyer purchases a house in Ikeja for ₦100,000,000 (₦100 million), and the parties are individuals, the stamp duty will be:
Stamp Duty = 1.5% × ₦100,000,000 = ₦1,500,000.
If either party is a company, the rate is 2%, giving:
Stamp Duty = 2% × ₦100,000,000 = ₦2,000,000.
Example 2: Lease Agreement
For a five-year lease on a property with an annual rent of ₦10,000,000:
Stamp Duty = 0.75% × ₦10,000,000 = ₦75,000 per year
Total for 5 years = ₦75,000 × 5 = ₦375,000.
Example 3: Mortgage Transaction
If a buyer takes a mortgage of ₦50,000,000 to finance a property:
Stamp Duty = 0.75% × ₦50,000,000 = ₦375,000.
Step-by-Step Process for Paying Stamp Duty in Lagos
Prepare the Document
The Deed of Assignment or related instrument must be prepared by a qualified property lawyer.Assess the Duty
Submit the document to the Stamp Duties Office (LIRS) for assessment based on transaction value.Generate a Payment Reference (Assessment ID)
The LIRS issues a payment reference or assessment bill via its portal or physical office.Make Payment
Payment is made through designated banks or online platforms linked to LIRS.Stamp the Document
Once payment is confirmed, the document is stamped—physically or electronically—with an official endorsement showing the date, amount, and payment reference.Keep the Receipt and Evidence of Payment
Always keep the official payment receipt and assessment form for future reference, especially during title perfection.
Deadlines for Stamping
Under Section 23 of the Stamp Duties Act, documents must be stamped within 30 days of execution in Nigeria.
If the document is executed abroad, it must be stamped within 30 days of being received in Nigeria.
Failure to stamp within this period attracts penalties and interest, and may render the document invalid for legal or registration purposes.
Penalties for Non-Payment or Late Payment
Penalty Fee – A surcharge equal to the unpaid duty plus interest.
Inadmissibility in Court – The document cannot be tendered as evidence in litigation.
Rejection at Land Registry – The Deed cannot be registered, preventing title perfection.
Possible Revocation – The government may challenge ownership if taxes and duties are unpaid.
Stamp Duty vs. Other Property Taxes in Lagos
It is essential to distinguish Stamp Duty from other related taxes and fees:
| Tax Type | When Payable | Purpose |
|---|---|---|
| Stamp Duty | On execution of legal documents | Validates property transactions |
| Consent Fee | During perfection of title | Governor’s approval for transfer |
| Registration Fee | After consent | Registers ownership in Land Registry |
| Capital Gains Tax | On sale of property | Tax on profit made |
| Land Use Charge | Annually | Property possession tax |
Legal Basis for Enforcement
The enforcement of stamp duty in Lagos is grounded in the following laws:
Stamp Duties Act (Cap S8 LFN 2004)
Land Use Act (1978)
Land Registration Law of Lagos State (2015)
Finance Act (2020) — which clarified responsibilities for collection
Lagos State Revenue Administration Law
LIRS serves as the authorized agency to assess and collect stamp duties for individual transactions within the state.
Common Mistakes in Stamp Duty Payments
Under-declaring Property Value to reduce payable duty.
Using Unregistered Agents instead of qualified lawyers.
Failure to Stamp Within 30 Days.
Omitting Required Pages or Attachments (e.g., survey plan).
Double Payment or Wrong Office Payment due to lack of legal guidance.
Avoiding these errors ensures your property transaction proceeds smoothly and your documents stand the test of law.
Case Study: A Lekki Transaction Gone Wrong
In 2023, a buyer purchased land in Lekki Phase II for ₦120 million. The agent promised to handle all documentation, including stamp duty, but failed to pay within 30 days. When the buyer attempted to register the Deed of Assignment months later, the Land Registry rejected it. LIRS imposed penalties totaling ₦2.4 million, plus interest.
Had the buyer engaged a qualified property lawyer, the entire process could have been completed lawfully and at a lower cost.
This scenario highlights why professional legal supervision is indispensable when dealing with property taxes in Lagos.
Frequently Asked Questions (FAQ)
Q1: Who pays stamp duty — the buyer or the seller?
Typically, the buyer pays the stamp duty, unless otherwise agreed.
Q2: Can a property be registered without paying stamp duty?
No. Registration requires a stamped document.
Q3: What happens if stamp duty is underpaid?
LIRS may reassess the property and demand full payment with penalties.
Q4: Can stamp duty be paid online?
Yes. Lagos State provides electronic payment options through the LIRS e-Tax portal.
Q5: Is stamp duty payable on installment payments?
Yes, based on the full consideration once the Deed is executed.
Q6: Can diaspora buyers pay from abroad?
Yes. Payment can be processed online, but legal coordination through a Nigerian law firm is essential.
Q7: Is stamp duty refundable?
Generally, no. Once stamped, the duty is considered earned revenue.
Q8: Does a Power of Attorney attract stamp duty?
Yes, if it involves transfer of monetary or property value.
Q9: What if I buy property through a company?
Stamp duty rate is 2% of the property’s consideration value.
Q10: What is the relationship between stamp duty and Governor’s Consent?
Stamp duty is paid before applying for Governor’s Consent as part of the perfection process.
Practical Tips for Buyers and Sellers
Always engage a licensed property lawyer to handle documentation.
Stamp your Deed of Assignment immediately after execution.
Verify your payment reference number with LIRS.
Ensure the consideration value stated matches the real purchase price.
Keep official receipts for all payments.
If buying from a company, confirm their tax clearance.
Retain both electronic and physical copies of stamped documents.
Conclusion
Stamp duty payment is one of the foundational steps in securing lawful property ownership in Lagos. It is more than a fiscal obligation—it is a legal prerequisite for title perfection, enforceability, and protection of your investment.
Whether you are a buyer, seller, developer, or diaspora investor, always ensure that your property documents are properly stamped, assessed, and recorded. The few hours or days spent fulfilling this obligation can save years of litigation and financial loss.
Call to Action
Are you purchasing property in Lagos and need professional assistance with stamp duty calculation, Governor’s Consent, and title perfection?
At Chaman Law Firm, we specialize in real estate law, property taxation, and documentation for both local and international clients. We ensure every transaction complies with the Stamp Duties Act and Lagos State property regulations.
