Step-by-Step Guide to Getting Tax Clearance in Lagos for Property Sales
Introduction
Tax clearance is one of the most crucial legal requirements in every property transaction in Lagos State. Whether you are selling land, a residential apartment, or a commercial building, the Lagos State Government and the Federal Inland Revenue Service (FIRS) require proof that you have complied with tax obligations before any transfer of property can be perfected. Without a valid tax clearance, property sales can be delayed, rejected, or even declared invalid for registration purposes. In short, you cannot successfully complete property documentation in Lagos without this important document.
A Tax Clearance Certificate (TCC) serves as official confirmation that a person or company has paid all taxes due and is not indebted to the government as of the date of issuance. It is often demanded by buyers, lawyers, and government authorities during property sales and registration processes. Despite its importance, many property owners and investors—especially those in the diaspora—do not fully understand how to obtain it or why it is indispensable in property transactions.
This comprehensive guide provides a clear, step-by-step explanation of how to get tax clearance in Lagos for property sales. It also highlights the relevant laws, agencies involved, and the consequences of not having a TCC. Whether you are an individual, corporate developer, or real estate investor, this article will help you navigate the process smoothly and avoid unnecessary setbacks.
Understanding the Role of Tax Clearance in Property Transactions
In Lagos, property transactions are governed by a combination of state and federal laws. These include the Land Use Act 1978, Capital Gains Tax Act, Personal Income Tax Act, Companies Income Tax Act, and Land Use Charge Law of Lagos State 2018 (as amended). Each of these laws recognizes the tax obligations of property owners and sellers. Before any property can change ownership, the government must confirm that the seller is a tax-compliant citizen or entity.
The Tax Clearance Certificate serves as evidence of that compliance. It is a document issued by the Lagos State Internal Revenue Service (LIRS) for individuals and the Federal Inland Revenue Service (FIRS) for companies, confirming that taxes have been paid up to date. This certificate is one of the mandatory documents required when applying for Governor’s Consent, registering a Deed of Assignment, or completing property sales documentation in Lagos.
The logic behind this requirement is simple: a person or company benefiting financially from the sale of property must demonstrate that they have also fulfilled their civic duty by paying taxes. This ensures fairness, accountability, and transparency in property ownership and transfers.
Why You Need a Tax Clearance Certificate for Property Sales
Legal Requirement: You cannot process Governor’s Consent or register your property sale without it.
Proof of Compliance: It shows that you are not in tax arrears and that your income or company profits are properly accounted for.
Enhances Credibility: Buyers and lawyers rely on TCCs to confirm the legitimacy of sellers.
Facilitates Documentation: Required when paying Capital Gains Tax, Stamp Duty, and Land Use Charge.
Enables Access to Government Approvals: Most government agencies in Lagos will not process applications without a TCC.
Prevents Legal Delays: Without a TCC, property transactions can be delayed indefinitely by regulatory agencies.
Simply put, having a valid tax clearance certificate ensures a seamless, legally recognized, and trustworthy property transaction.
Types of Tax Clearance Certificates
Tax clearance is generally issued for two categories of taxpayers:
1. Individuals:
Issued by the Lagos State Internal Revenue Service (LIRS) under the Personal Income Tax Act (PITA). This applies to individuals, sole proprietors, landlords, and other non-corporate persons.
2. Companies and Corporate Entities:
Issued by the Federal Inland Revenue Service (FIRS) under the Companies Income Tax Act (CITA). This applies to limited liability companies, partnerships, and property development firms.
In Lagos property sales, an individual seller needs a TCC from LIRS, while a company selling property must provide one from FIRS.
Documents Required to Obtain Tax Clearance
Before applying, you must gather certain documents depending on your taxpayer category.
For Individuals:
Completed Tax Clearance Application Form.
Proof of payment for previous years’ personal income taxes (usually the last three years).
Evidence of tax identification number (TIN).
Recent passport photograph.
Valid identification (e.g., driver’s license, international passport, or voter’s card).
Utility bill showing residential address.
Evidence of employment or business registration (for self-employed individuals).
Payment receipts or bank tellers for any outstanding tax liabilities.
For Companies:
Company Tax Identification Number (TIN).
Audited financial statements for the last three accounting years.
Evidence of Company Income Tax (CIT) payments.
VAT registration and returns.
Withholding Tax (WHT) receipts.
Directors’ individual TCCs.
Memorandum and Articles of Association.
Evidence of remittance of PAYE for employees.
Ensuring that all documents are complete before application helps to prevent unnecessary delays during processing.
Step-by-Step Process for Obtaining Tax Clearance for Property Sales in Lagos
Step 1: Determine the Relevant Tax Authority
Individuals should approach the Lagos State Internal Revenue Service (LIRS), while companies must go through the Federal Inland Revenue Service (FIRS). Both have offices across Lagos, including specialized tax stations for high-net-worth individuals and corporate entities.
Step 2: Register for a Tax Identification Number (TIN)
If you do not already have a TIN, you must obtain one before applying for a TCC. The TIN uniquely identifies you as a taxpayer in Nigeria. It can be obtained free of charge through the Joint Tax Board (JTB) portal or at any FIRS/LIRS office.
Step 3: File Your Tax Returns
Before applying for tax clearance, ensure your tax returns for the last three years are filed. This includes annual income declarations (for individuals) or audited financial statements (for companies). Filing can be done manually or through the official online portals of LIRS or FIRS.
Step 4: Calculate and Pay Any Outstanding Taxes
You must clear all outstanding tax liabilities before your clearance will be issued. The tax authority will assess your tax history, determine unpaid balances, and issue a Tax Liability Notice if necessary. Once you pay all arrears and penalties (if any), your file proceeds to verification.
Step 5: Complete the Tax Clearance Application Form
Obtain and fill out the official application form. Provide accurate information such as your TIN, full name, contact details, employment or business type, and the purpose of the TCC (in this case, property sale). Submit the completed form with all supporting documents.
Step 6: Verification and Assessment
Tax officials will review your application, verify tax payments, and confirm your identity. For companies, this involves checking financial statements, PAYE remittances, and VAT returns. For individuals, personal income tax compliance will be verified through the LIRS database.
Step 7: Payment Confirmation and Issuance of Clearance
Once verification is complete and no outstanding liability is found, the tax authority issues a Tax Clearance Certificate valid for one year from the date of issuance. The certificate typically bears the taxpayer’s name, TIN, reference number, tax period covered, and official signature of the issuing authority.
Step 8: Submit TCC for Property Transaction
After obtaining your certificate, attach it to your property sales documentation—including Deed of Assignment, Capital Gains Tax receipts, Stamp Duty receipt, and Governor’s Consent application file. Without this certificate, your property registration may be halted. Timeline and Validity
Processing time for a TCC varies depending on the completeness of documentation but typically takes between 10 to 20 working days. The certificate remains valid for one year and must be renewed annually for future transactions or tax verification purposes.
Fees and Charges
There is no official fee for obtaining a TCC, but applicants must first pay all outstanding taxes. Some administrative charges may apply for file opening, verification, or processing. Payments should be made only through official government-approved channels or Remita.
Common Reasons for Delay or Rejection
Incomplete documentation or missing receipts.
Unpaid or under-declared taxes.
Incorrect or invalid TIN.
Errors in filling application form.
Discrepancies between declared income and actual financial records.
Outstanding PAYE or VAT liabilities for corporate applicants.
To avoid these pitfalls, it is advisable to engage a tax consultant or property lawyer to handle the process professionally.
How Tax Clearance Impacts Property Sales
Title Perfection: Governor’s Consent and registration require evidence of TCC.
Buyer Confidence: Buyers rely on it to confirm legal and tax compliance.
Legal Protection: It serves as defense against tax evasion claims.
Ease of Future Transactions: TCC simplifies future property transfers or financing.
Government Compliance: Protects sellers from enforcement or audit actions.
Case Study: A Property Sale Delayed by Lack of Tax Clearance
Mr. Akin, a real estate investor, sold a block of flats in Surulere for ₦120 million. However, when his lawyer applied for Governor’s Consent, the Lands Bureau rejected the file because the seller could not produce a Tax Clearance Certificate. He had not filed any tax returns in three years. FIRS assessed him ₦3.5 million in back taxes, ₦250,000 in penalties, and ₦100,000 in interest before processing his TCC. The delay cost him three months and extra legal fees. This case highlights why property sellers should obtain and maintain valid tax clearance long before initiating any sale.
Tax Clearance for Diaspora Property Owners
For Nigerians living abroad, obtaining a TCC is still mandatory when selling property in Lagos. The process can be handled remotely by appointing a lawyer or tax consultant through a Power of Attorney. The authorized representative will handle filing, verification, and payment on behalf of the property owner. Digital copies of tax receipts and clearance certificates can then be transmitted electronically to the owner for documentation purposes.
Diaspora investors should also note that tax compliance enhances credibility when transacting with local buyers, developers, or financial institutions.
Consequences of Selling Property Without a TCC
Rejection of Governor’s Consent or registration.
Delay or cancellation of property sale.
Exposure to tax audit or backdated assessment.
Payment of penalties, interest, or legal costs.
Possible loss of buyer confidence or litigation.
Blacklisting by government agencies or tax authorities.
To avoid these consequences, it is advisable to process your tax clearance early in the transaction process.
Benefits of Having Tax Clearance
Enables smooth property registration and documentation.
Builds trust with buyers, lawyers, and financial institutions.
Demonstrates transparency and compliance with Nigerian law.
Reduces risk of penalties or government enforcement.
Strengthens personal and corporate reputation in the real estate market.
Frequently Asked Questions (FAQs)
1. Who issues tax clearance in Lagos?
The Lagos State Internal Revenue Service (LIRS) issues TCCs to individuals, while the Federal Inland Revenue Service (FIRS) handles corporate entities.
2. How many years of tax records are required?
Typically, the last three years of tax payment receipts or filings are required.
3. Can I get tax clearance if I have outstanding taxes?
No. You must clear all outstanding liabilities before your certificate can be issued.
4. How long does it take to get tax clearance?
Usually 10 to 20 working days, depending on documentation and verification.
5. Can a lawyer apply on my behalf?
Yes. You can authorize a lawyer or tax agent to act on your behalf through a Power of Attorney.
6. Is tax clearance valid indefinitely?
No. It is valid for one year and must be renewed annually.
7. Do I need separate tax clearance for each property?
No. One valid TCC covers all your property transactions within its validity period.
Professional Tips
Start your tax clearance application early—ideally before initiating property sale discussions.
Maintain organized financial records and receipts.
Use only authorized tax officers or government channels for payment.
Consult a property lawyer or tax advisor for proper guidance.
For diaspora investors, appoint a reliable Lagos-based representative.
Conclusion
Obtaining a Tax Clearance Certificate is not merely a bureaucratic formality—it is an essential part of lawful property ownership and sales in Lagos. Without it, even the most lucrative property transaction can stall indefinitely. It ensures compliance with the law, demonstrates transparency, and protects both buyer and seller from future disputes. For developers, investors, and individuals, maintaining annual tax compliance makes future sales smoother and faster.
In an era of increasing government digitization and fiscal enforcement, Lagos authorities now verify property transactions through inter-agency collaboration between LIRS, FIRS, and the Ministry of Lands. This means every property sale is traceable, and non-compliant sellers will face penalties or delays. The safest path is to stay compliant, file taxes regularly, and obtain your TCC before embarking on any sale.
Call to Action
If you are planning to sell property in Lagos or need assistance obtaining your Tax Clearance Certificate, let experts handle it for you. At Chaman Law Firm, we specialize in Property Law, Tax Compliance, and Title Documentation, providing end-to-end support for individuals, developers, and diaspora clients.
Through Chaman Properties, we also offer property management, real estate investment, and documentation support to ensure smooth, transparent, and legally compliant transactions.