What is the capital gains tax rate on property in Nepal in 2082/83?

For a resident natural person selling land or a house, CGT is 5% on the gain if the property was held for more than 5 years, and 7.5% on the gain if held for 5 years or less. Both rates were doubled in Finance Act 2079/80 from the older 2.5%/5% and have been retained since. Companies and registered firms pay 1.5% on the sale value at the Land Revenue Office and reconcile in their corporate return. Apartments fall under the same CGT regime as land and houses.

Is capital gains tax in Nepal calculated on the sale price or only on the gain?

Only on the gain. Gain equals sale price minus original purchase price minus allowable expenses (registration cost from the original purchase, broker commission, legal fees, and documented improvements). The transaction value used is the higher of the actual sale price and the government minimum valuation (malpot rate) for that area, so under-declaring the deed price does not reliably reduce CGT — it can also raise it for the buyer on a future resale.

Who pays CGT and when?

The seller pays. It is collected at the Land Revenue Office at the time of registration and transfer under Section 95A of the Income Tax Act 2058. The office withholds the applicable rate from the seller before clearing the transfer. The Inland Revenue Department confirmed in writing to the Nepal Land and Housing Developers Association that the CGT paid at registration is the final tax on real-estate gains by natural persons, with no separate filing afterwards.

How is registration tax different from CGT?

Registration tax (rajistreshan dastur) is paid by the buyer, not the seller, and it is a percentage of the declared deed value, not the gain. Inside the Kathmandu Valley the effective rate runs roughly 5.3% in metropolitan, 4.65% sub-metropolitan, 4.8% municipality, and 3% in rural municipality, with an additional 5% surcharge for the Bagmati Civilization Fund. Women buyers receive a 25% concession in urban areas and 30% in rural; single women may get an additional 10% reduction. Apartments are taxed at a flat 1% (0.5% for 5-storey or taller). CGT and registration tax are separate transactions on opposite sides of the same deal.

Is inherited property in Nepal subject to capital gains tax when sold?

Yes, but the base cost is reset to the market value at the time of inheritance, not the original ancestor's purchase price. So if a plot inherited in 2018 at a Rs 60 lakh valuation is sold today at Rs 90 lakh, the taxable gain is Rs 30 lakh, not the gain over the ancestor's 1970s cost. The transfer through inheritance itself is exempt from CGT; the tax only applies on the subsequent sale to a third party.

Is there a primary-residence exemption in Nepal like the US $250,000 exclusion?

Not directly. Nepal has a much narrower carve-out: property held for 10 years or more and sold at a transaction value of up to Rs 10 lakh is exempt. Above that threshold the standard 5% rate applies. There is no broad 'one house in your lifetime' exclusion equivalent to the US Section 121 exclusion or India's Section 54 reinvestment relief. For comparison, India's LTCG on property sold after 23 July 2024 is 12.5% without indexation, and the US excludes up to $250,000 (single) or $500,000 (married) of gain on a primary residence held 2 of the last 5 years.

Capital Gains Tax on Property in Nepal (FY 2082/83)

My cousin sold a 4-aana plot in Tokha last Mangsir. He had bought it nine years earlier at Rs 12 lakh per aana, signed the new deed at Rs 14 lakh per aana, and walked out of the Lalitpur Malpot office mildly annoyed. The office had withheld Rs 40,000 from his payment before clearing the transfer. He had budgeted nothing for tax.

His first question was whether the cut was the 5% he'd heard about, or the 10% his broker had quoted, or something else entirely. The honest answer: 5% of his gain, because he held the plot more than five years. Most sellers walk into a Malpot office with one of three numbers in their head, and at least two of them are wrong.

The math is simple once the moving parts are separated. The reason it feels confusing is that four different percentages get talked about in the same breath: CGT itself, the Income Tax Act's older statutory rates, the buyer's registration fee, and the advance withholding at registration. Nobody at the Malpot counter is going to explain which one applies to which side of the table.

The rates that actually apply

There are two rates for resident natural persons selling land or buildings in Nepal, and they have been at these levels since the Finance Act 2079/80 doubled the older statutory numbers (source).

Holding period	CGT rate	Applies to
More than 5 years	5% on the gain	Long-term natural person
5 years or less	7.5% on the gain	Short-term natural person
Any	1.5% on sale value	Companies / registered firms
Apartments	5% or 7.5% on gain	Same regime as land

The Income Tax Act 2058 itself, under Section 95A(5), still drafts the rates at 2.5% and 5% (source). The Finance Act each year overrides those numbers, and the prevailing override has held at 5% and 7.5% for natural persons. If a broker quotes you the older Act figures, that is where they are reading from.

Tax applies to the gain only. A common mistake, including in some bank explainers, is to multiply CGT by the full deed value. Gain equals sale price minus the original purchase price minus allowable expenses (source).

The transaction value used is the higher of the actual deed price and the government minimum valuation for that area. If the deed sits below the malpot's published per-anna rate, the office substitutes the higher figure for the CGT calculation.

What the seller can subtract from the gain

Three categories of expense reduce the taxable gain (source):

Original purchase price, with the registered deed as proof.
Registration cost from that original purchase — the registration fee paid back then is added to base.
Documented improvements: legal fees, broker commission on the purchase side, and the cost of any construction or renovation supported by receipts.

The catch is the documentation. A seller who paid cash for renovation in 2014 with no receipts cannot deduct it in 2026. Self-built homes are the most common edge case. The cost of construction on owner-built houses is recognised only against documented receipts, and most Nepali owners simply do not keep them.

For inherited property the base cost is reset to the market value on the date of inheritance, not the original ancestor's purchase price (source). So a plot inherited in 2018 at a Rs 60 lakh valuation, sold today at Rs 90 lakh, has a taxable gain of Rs 30 lakh — much smaller than the gain over the grandfather's 1970 cost would have been.

Section 95A: how the tax actually reaches the IRD

Under Section 95A of the Income Tax Act 2058 (statute text), the Land Revenue Office collects the CGT at the moment of transfer. The seller signs over the deed, the office calculates the gain, withholds the applicable percentage, and only then clears the registration. Nothing reaches the seller's bank account until that step is done.

What happens after is the part most people miss. In a letter to the Nepal Land and Housing Developers Association, the Inland Revenue Department confirmed that "the capital gains tax, filed at either 5 percent or 7.5 percent according to the prescribed rules, will be considered final for such transactions" (source). For a resident natural person, the malpot's withholding is the end of the matter. No separate IRD return, no reconciliation, no surprise notice six months later.

Companies and registered firms are different. They pay 1.5% on the sale value at the Land Revenue Office and reconcile the rest at their corporate return, where real-estate gains are taxed at the regular corporate rate.

Registration tax is a separate transaction, paid by the buyer

This is where most sellers get the math wrong by a factor of 10. The registration fee (rajistreshan dastur) is paid by the buyer, on the declared value, and has nothing to do with the seller's gain.

Effective registration rates inside the Kathmandu Valley, including the 5% Bagmati Civilization Fund surcharge (source):

Buyer location	Registration fee	Notes
Metropolitan (KMC, Lalitpur)	5.3%	Highest in valley
Sub-metropolitan	4.65%
Municipality	4.8%
Rural municipality	3%
Apartment (any area)	1% flat	0.5% for 5-storey or taller

Women buyers receive a 25% concession in urban areas and 30% in rural municipalities, with an additional 10% reduction for single women (source). This is the cheapest legitimate way to reduce the up-front cost of a Kathmandu property purchase, and it is one of the reasons most family plots in the Valley are registered in the wife's name.

The registration fee and CGT are calculated from the same deed value but flow to opposite sides of the deal. A buyer worrying about CGT and a seller worrying about registration tax are both confused. The full registration-side numbers — stamp duty, lawyer fees, naksha pass — sit in the land verification checklist.

Threshold and exemptions

Two exemptions matter for everyday transactions.

Below Rs 10 lakh: CGT on house or land does not apply where the transaction value falls below Rs 10 lakh (source). A plot in a remote VDC sold for Rs 6 lakh has no CGT attached.

Long-held, low-value house: property held for 10 years or more and sold for up to Rs 10 lakh is exempt (source). This is the closest thing in Nepali law to a primary-residence exemption. Above the Rs 10 lakh ceiling the standard 5% kicks in, regardless of how long the property was held.

Family-line transfers: gifts and inheritance passed down the family line are exempt from CGT at the moment of transfer. The receiver's eventual sale to a third party is taxable, with the base cost set at the inheritance-date market value.

For comparison, neither India nor the US works this way. India taxes LTCG on property at 12.5% without indexation on sales after 23 July 2024 (source). The US excludes the first $250,000 (single) or $500,000 (married) of gain on a primary residence held two of the previous five years (IRS source). Nepal's regime is narrower on exemptions and flatter on rate.

Three worked examples

The math becomes obvious once the four numbers are separated. Each example uses Kathmandu Valley anchors from the FY 2082/83 government valuation table (source).

Example 1. Tokha plot, long-term, no documented improvements. Bought a 4-aana plot in 2017 at Rs 12 lakh per aana = Rs 48 lakh. Sold in 2026 at Rs 14 lakh per aana = Rs 56 lakh. Original registration cost at roughly 4.8% in the municipality at the time = Rs 2.3 lakh, added to base. Allowable base = Rs 50.3 lakh. Gain = Rs 5.7 lakh. CGT at 5% (long-term) = Rs 28,500. Withheld at Malpot before payment clears, nothing else owed.

Example 2. Bhaisepati flat, short-term resale. Bought a 1,150 sq-ft apartment in late 2023 at Rs 1.2 crore. Sold in 2026 at Rs 1.5 crore. No documented improvements. Gain = Rs 30 lakh. CGT at 7.5% (short-term) = Rs 2.25 lakh. Seller-side broker commission of roughly 1% (Rs 1.5 lakh) and any properly invoiced legal fees are deductible from gain. If Rs 75,000 of legal fees and the full broker fee are documented, the taxable gain shrinks to Rs 27.75 lakh and CGT to Rs 2.08 lakh. Small numbers individually, but they justify keeping the invoices.

Example 3. Inherited Baluwatar plot. A 2-aana plot inherited in 2018 at a market valuation of Rs 70 lakh per aana = Rs 1.4 crore inheritance-date base. Sold in 2026 at the current Baluwatar premium-zone band of about Rs 1 crore per aana (market source) = Rs 2 crore. Gain = Rs 60 lakh. Holding period from inheritance: 8 years (long-term). CGT at 5% on Rs 60 lakh = Rs 3 lakh. The transfer at inheritance in 2018 was exempt; only this 2026 sale to a third party triggers tax.

These numbers ignore registration fees on the buyer side, which sit at 5.3% of the declared value inside KMC and run as a separate calculation paid by the buyer.

Where under-declaration backfires

Sellers sometimes ask the buyer to under-declare the deed value, on the logic that a lower sale price means a smaller gain and a smaller CGT bill. Two reasons this is a bad deal.

First, the office substitutes the government minimum valuation when the deed price falls below it. The seller does not actually save CGT; the IRD calculation simply runs off the malpot rate.

Second, the buyer's base cost is now artificially low. When the buyer eventually resells, the gain is larger by the same amount that was under-declared, and CGT on that future sale is correspondingly higher. The seller has shifted the tax onto the buyer with extra interest.

A court-validated case from 2017 makes the enforcement risk concrete. A New Road plot was registered at Rs 5 million per aana while the actual transaction was Rs 50–60 million per aana. The Department of Land Reforms filed in court and won; CGT was recovered on the true value (source). The same article notes that Kathmandu Valley contributes 50–55% of all land-transaction tax revenue nationally, which is one reason the office watches under-valued deeds closely.

The clean move is to declare the actual price. If you are buying, decline the under-declaration politely. The pressure to skip Malpot's valuation rule is usually a signal about the rest of the documentation, which the 9-document checklist covers.

What you actually need to know

The current rates are 5% on the gain for property held more than five years and 7.5% for five years or less, applied to a resident natural person selling land, a house, or an apartment. The Income Tax Act's older 2.5%/5% language has been overridden by Finance Act every year since 2079/80. Companies pay 1.5% of sale value at Malpot and reconcile separately.
CGT is collected at the Land Revenue Office at registration and is the final tax for natural persons. No separate filing, no annual return, no surprise IRD notice if the Malpot calculation is correct. Confirmed by IRD in writing to the Nepal Land and Housing Developers Association.
Track your base cost from the moment you buy. Original registration fee, broker commission, legal fees, and documented construction or renovation receipts all subtract from the gain. The most expensive Nepali CGT error is forgetting Rs 4–5 lakh of legitimate additions to base because the paperwork was never kept.

If you are about to sell a long-held plot in the Kathmandu Valley and want a sanity check on the gain math, email parjanya57@gmail.com and we can run through the deductions you may be missing.

This post is part of the Nepal Money Basics guide — the housing and big-ticket section.