Section 42 (2) (C) – Tax Exemptions for Traders in Houses

In accordance with the Income Tax Act Section 42 (2) (c) “there shall be exempted from income tax the gains or profits derived from the initial sale of newly constructed houses of the class specified in section 43 by any person registered in the prescribed manner as a trader in such houses”.

Who is eligible?

An application under section 42 (2) (c) shall be in respect of a newly constructed dwelling house for –

• which construction –
  I. commenced after 1st February, 2013; andII. had a total cost exclusive of the cost or value of land not exceeding one million, five hundred thousand dollars;
• the initial sale of the house; and
• persons registered with the Corporation as Traders in Newly Constructed Dwelling Houses.

The Process

• The “Application for Certificate for Purposes of Claiming Exemption Under Section 42 (2) (c) of the Income Tax Act” can be collected at the HDC’s Head Office
• The completed Application Form must be submitted to Ms. Oluremi Idowu, Tenders and Contract Management Department, First Floor, HDC Head Office, and accompanied by the following documents:
  • Proof of Registration as a Trader in Newly Constructed Dwelling Houses;
  • The Deed of Conveyance;
  • The contract made with contractors indicating the date of mobilization;
  • Building Permit/ Town and Country Planning Department (TCPD) Approvale. The Bill of Quantities;
  • A document indicating proof of source of funds;
  • Annual Returns;h. Notice of Directors;
  • Valid Board of Inland Revenue Certificate;
  • Valid Value Added Tax Certificate;
  • The Certificate of Completion.
• Upon evaluation and verification of submitted documents and dwelling house, a report is prepared and forwarded to the Minister of Housing and Urban Development for his signature on the Certificate to be issued.

SECTION 45C – Tax Exemptions for Land Developers

In accordance with the Income Tax Act Section 45C “there shall be exempt from income tax until the year ending 31st December, 2025, the gains and profits derived from the initial sale of residential house site, being part of a land development project”.

Who is Eligible?

A Certificate may be issued to persons for projects that satisfy the following criteria:

• The land development project commenced on or after 1st October 2012;
• The proceeds of the initial sale of a residential house site in the land development project were received on or before 31st December, 2025; and
• The residential land development project has satisfied the requirements for development planning standards for roads, drainage and utilities;
• The land development project is not less than one acre for residential purposes;
• The residential house site is a parcel of land not less than 5,000 square feet (464.5 metres squared) that has been approved for residential purposes, being part of a land development project.

The Process

• The “Application for Certificate for Purposes of Claiming Exemption Under Section 45C of the Income Tax Act” can be collected at the HDC’s Head Office
• The completed Application Form must be submitted to Ms. Oluremi Idowu, Tenders and Contract Management Department, First Floor, HDC Head Office, and accompanied by the following documents:
  • Proof of Registration as a Land Developer;
  • Evidence that the land development project commenced on or after 1st October, 2012;
  • Evidence that the proceeds of the initial sale of a residential house site were received on or before 31st December, 2025;
  • Evidence that the land development project has satisfied the requirements for development planning standards for roads and drainage and clearance from the Water and Sewerage Authority, public health, fire safety and other utilities;
  • Evidence that the land has been allocated for the development of a residential house site or land development project;
  • Building Permit. A Certificate of Completion issued by the appropriate local authority.
• Upon evaluation and verification of submitted documents and project(s), a report is prepared and forwarded to the Minister of Housing and Urban Development for his signature on the Certificate to be issued.
• The Corporation will forward a Monthly Report to the Chairman of the Board of Inland Revenue listing the persons that have been issued the Tax exemption Certificate for the period.