In the final month of fiscal year 2082/83, Nepal’s land revenue offices registered 70,480 new property purchase and sale deeds, up from 54,724 the month before. The rush had one trigger: a capital gains tax increase that took effect on the first day of the new fiscal year. Since Shrawan 1, 2083 (July 17, 2026), a person selling land or a building held for five years or more pays 7.5 percent on the gain, and someone selling within five years pays 10 percent. Both rates rose by 2.5 percentage points. If you own property in Nepal and expect to sell, the math on your exit changed this year.
Key Takeaways
- Capital gains tax on land and buildings held by individuals rose on July 17, 2026: 7.5 percent for property owned five years or more (up from 5 percent) and 10 percent for property owned less than five years (up from 7.5 percent).
- The tax applies to the gain (sale price minus documented cost), not the full sale value, and the Land Revenue Office (malpot) withholds it at the point of registration.
- For individuals, the Inland Revenue Department treats this withholding as a final tax: no separate return or further assessment is required on that gain.
- Companies and other entities face a 1.5 percent advance collection at transfer, with the gain then folded into taxable business income.
- A private residence that one person has owned and lived in continuously for 10 years is excluded from the charge, and disposals under Rs 10 lakh fall outside the taxable category entirely.
- Land and property transactions brought the Department of Land Management and Archives roughly Rs 61 billion in FY 2082/83, with a single peak month (Asar) delivering Rs 11.95 billion as sellers raced to beat the hike.
What Changed on July 17, 2026
The federal budget for FY 2083/84, presented on May 29, 2026, raised the capital gains tax on non-business chargeable assets, the category that covers most privately held land and buildings. The change is straightforward: each bracket went up by 2.5 percentage points, and the holding-period line stayed at five years. The point of that line is to tax quick flips more heavily than long-term ownership, a design meant to cool speculation without penalizing families who hold property for decades.
| Seller (natural person) | Rate before July 17, 2026 | Rate now (FY 2083/84) |
|---|---|---|
| Owned 5 years or more | 5.0% | 7.5% |
| Owned less than 5 years | 7.5% | 10.0% |
| Compulsory government acquisition | Standard rate | 2.5% (concessional) |
| Donation to federal, provincial or local government | Taxable | No capital gains tax |
The budget also added two reliefs that run the other way. When the government compulsorily acquires an individual’s land or building, for a road or other public project, the gain is now taxed at a concessional 2.5 percent rather than the standard bracket. And an individual who donates land or a private building free of cost to the federal, provincial, or local government pays no capital gains tax at all. These carve-outs matter in a country where public infrastructure routinely cuts through private plots.
The Tax Is on the Gain, Not the Sale Price
A common misread is that the rate applies to the whole amount a property fetches. It does not. Capital gains tax falls on the gain: the registered sale value minus the documented cost of acquiring and improving the asset. If you bought land for Rs 1 crore and sell it for Rs 1.5 crore after six years, the gain is Rs 50 lakh, and the 7.5 percent charge is Rs 3.75 lakh, not 7.5 percent of the full Rs 1.5 crore. The Land Revenue Office computes and withholds this at registration, which is why sellers feel it immediately rather than at a later filing.
For individuals, that withholding is the end of the matter. In a 2023 clarification to the Nepal Land and Housing Developers’ Association, the Inland Revenue Department confirmed that capital gains tax paid at the prescribed rate is treated as final for such transactions. There is no second assessment and no need to reconcile the gain against annual income. That finality is part of why the rate itself carries so much weight: for a natural person, what the malpot takes is the whole tax bill on the sale.
What Is Exempt, and What Is Not
Not every sale is caught. A building that one individual has owned and occupied as a private residence continuously for 10 years is excluded from the non-business chargeable asset category, so its sale carries no capital gains tax. Small disposals are also outside the net: property sold for less than Rs 10 lakh does not count as a chargeable asset. Bare land, however, enjoys no 10-year residence relief. Land is almost always a chargeable asset once it clears the Rs 10 lakh floor, regardless of how long it has been held, which is why long-held farmland or an inherited plot can still generate a sizable bill when it finally changes hands.
Inheritance and the holding clock trip up many sellers. The five-year period is measured from when the current owner acquired the asset, so property received recently through partition or transfer can land in the higher 10 percent bracket even if it has been in the family for generations. Reading the rules behind the lalpurja before a sale is the difference between planning the tax and being surprised by it.
Companies Are Treated Differently
The flat 7.5 and 10 percent brackets are for natural persons. When a company or other entity disposes of land or a building, the Land Revenue Office collects 1.5 percent of the transaction as advance tax at transfer. That is not the final charge. The gain is treated as business income and taxed at the entity’s normal rate when it files, with the 1.5 percent credited against the bill. For developers and firms holding property on their books, the real estate exit therefore flows through the corporate return rather than ending at the registration counter, a structural reason individual sellers and corporate sellers plan their timing very differently.
Why the Tax Is Also a Revenue Story
Land transactions are one of the government’s more dependable revenue lines. In FY 2082/83, the Department of Land Management and Archives collected on the order of Rs 60 billion to Rs 62 billion from land and property transactions, a three-year high. Capital gains tax is only part of that figure, which also includes registration fees and service charges, but the behavioral response to the rate change was unmistakable. The month of Asar, the final month before the hike, alone brought in Rs 11.95 billion, the highest monthly collection of the year, as buyers and sellers pulled deals forward to lock in the old rates.
That surge is a warning as much as a windfall. Revenue that is pulled forward into one month is revenue borrowed from the next, and transaction volumes typically sag in the months after a tax increase. Nepal’s banking system already carries heavy exposure to this sector, as BiznesVue has detailed in its reading of Nepal Rastra Bank’s real estate data. A tax change that reshapes when and whether people transact feeds straight into collateral values, loan activity, and the pace of the market.
The Valuation Catch
Here is the complication that keeps the headline rate from telling the whole story. The gain is calculated from registered values, and in Nepal the registered value of a deal is frequently the government minimum valuation rather than the real price paid. When land is bought and sold at values recorded well below the market, the taxable gain on paper is smaller than the economic gain in reality, and the capital gains tax collected is correspondingly lighter. This is the same gap that BiznesVue has examined in Nepal’s dual land pricing problem. Raising the rate does not close that gap; it raises the levy on a base that is already understated. A higher rate on a low valuation can still yield less than a modest rate on an honest one.
What a Seller Should Do Now
Three practical steps follow from the new rules. First, confirm your holding period from the acquisition date on the lalpurja, because crossing the five-year line drops the rate from 10 percent to 7.5 percent and can be worth waiting for. Second, assemble the documented cost of the property, including the purchase price and any registered improvement costs, since every verifiable rupee of cost reduces the taxable gain. Third, separate the two large charges you will face at transfer: capital gains tax on the gain, and registration fees set independently by local and provincial governments, which are often the larger line and vary by municipality and value. Before setting a price, it helps to study comparable listings for your area on a platform such as Basobaas so the figure you register reflects a defensible market value rather than a number that invites scrutiny.
The broader context matters too. The same budget cycle that raised this tax also eased home-loan access, as covered in our look at Nepal’s higher loan ceiling and lower rates. Policy is pulling demand and taxing exits at the same time, and sellers who understand both levers are better placed than those watching only the rate. For more market and policy coverage, see the full BiznesVue real estate archive.
Frequently Asked Questions
What is the current capital gains tax rate on property in Nepal?
For an individual, the rate is 7.5 percent on the gain if the land or building was owned for five years or more, and 10 percent if it was owned for less than five years. Both rates took effect on July 17, 2026 (Shrawan 1, 2083), up 2.5 percentage points from the previous 5 and 7.5 percent.
Is capital gains tax charged on the full sale price or only the profit?
Only on the gain. The gain is the registered sale value minus the documented cost of acquiring and improving the property. The Land Revenue Office calculates and withholds the tax at registration, so the charge is based on the profit, not the headline sale amount.
Which property sales are exempt from capital gains tax in Nepal?
A private residential building that one individual has owned and occupied continuously for 10 years is exempt, and any disposal under Rs 10 lakh falls outside the chargeable category. Donating land or a private building to the federal, provincial, or local government is also free of the tax. Bare land does not qualify for the 10-year residence relief.
How is capital gains tax on real estate collected and is it final?
The Land Revenue Office (malpot) withholds it at the time of registration. For individuals, the Inland Revenue Department treats this payment as a final tax on the transaction, so no separate return or further assessment is required on that gain.
Do companies pay the same capital gains tax rate as individuals?
No. The 7.5 and 10 percent brackets apply to natural persons. For a company or other entity, the Land Revenue Office collects 1.5 percent as advance tax at transfer, and the gain is then taxed as business income at the entity’s normal corporate rate when it files, with the advance credited against that bill.
