Analysis of Tax Policy Effects on Real Estate Investment in Nigeria.
1Ojeniyi S.A, 2Sakariyau J. K, 1*Akinade A. and 3Ozugha A. G
1Department of Estate Management, Ladoke Akintola University of Technology, Ogbomoso, Oyo State, Nigeria.
2Department of Estate Management, University of Abuja, Abuja, Nigeria.
3Department of Estate Management and Valuation, Yaba College of Technology, Yaba, Lagos, Nigeria.
DOI: 10.36108/laujoces/6202.61.0270
Abstract
At this crucial point in its economic development, Nigeria is working to diversify away from its reliance on oil, and the real estate industry is emerging as a key growth engine. With more than 220 million people and an economy of over $440 billion, Nigeria is the most populated country in Africa. As such, it has the biggest real estate market on the continent and a sizable growing market opportunity worldwide. However, the industry faces unheard-of difficulties such as Fragmented regulations, inconsistent approvals, multiple taxation, policy instability, duplicative compliance, and inadequate infrastructure integration increase costs and delays. The afore written difficulties stem to go well beyond conventional market dynamics and this led to an intricate relationship between fiscal policy and development that essentially influence investment flows and patterns of development. This study uses primary data from 312 developers of real estate in six major urban locations to investigate how taxes affect the development of real estate in Nigeria. Using structural equation modeling and multiple regression analysis, the study finds that cumulative tax burden considerably lowers the pace of development, with a 2.3% drop in development projects for every 1% increase in the effective tax rate. According to the study, the combined effect of property taxes, capital gains taxes, and other levies raises development costs by 18–24%, resulting in a major effect on the affordability of housing. Tax harmonization, affordable housing incentive programs, and increased revenue utilization transparency are among the policy ideas.
Keywords: Real estate taxation, Nigeria, development costs, housing, fiscal policy.
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