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The short answer
When a buyer pays for Nigerian land over several years, a Canadian resident can usually claim a capital gains reserve on Form T2017, so the gain is taxed as the money comes in rather than all in the year of sale. The CRA generally allows the reserve over at most four years after the sale, so the whole gain is taxed within five years however slowly the buyer pays. Non-residents cannot claim it.
Instalment sales are common in Nigeria. A buyer pays a deposit, takes an allocation letter, and clears the balance over twelve or twenty-four months, sometimes longer. For a seller living in Canada, the tax question is simple to state: is the whole gain taxed in the year of sale, or as the payments arrive? Guide T4037 (Capital Gains 2025, modified 11 February 2026) gives the answer.
The reserve, in the CRA's words
- A reserve lets you defer part of a gain where you receive the proceeds over several years; the deferral follows the share of proceeds not yet received.
- Generally the maximum reserve period is four years, so the gain is brought in over five; a nine-year period applies only to certain family farm, fishing and small business transfers.
- You do not have to claim the maximum reserve in a year, but a later year's claim for the property cannot be more than the previous year's.
- Non-residents, people exempt from tax, and anyone selling to a corporation they control cannot claim a reserve.
- The claim is made on Form T2017.
Working out the gain first
The gain itself is fixed in the year of sale. T4037 converts the proceeds at the exchange rate at the time of sale, the adjusted cost base at the rate when you acquired the land, and selling costs at the rate when incurred. Selling costs include commissions, legal fees, transfer taxes, surveyors' fees and advertising. The Bank of Canada does not publish a naira rate (its table, as at 23 October 2026, lists 24 other currencies), so use one consistent source as Folio S5-F4-C1 allows.
Worked example (illustrative figures only)
| Item | CAD |
|---|---|
| Proceeds, converted at the sale-date rate | 80,000 |
| Adjusted cost base, converted at the purchase-date rate | 48,000 |
| Selling costs | 2,000 |
| Capital gain | 30,000 |
The buyer pays 40% in the year of sale, 30% the next year and 30% the year after.
| Year | Proceeds still owed at year end | Reserve (gain × share owed) | Gain included | Taxable at one-half |
|---|---|---|---|---|
| Year of sale | 60% | 18,000 | 12,000 | 6,000 |
| Year 2 | 30% | 9,000 | 9,000 | 4,500 |
| Year 3 | 0% | 0 | 9,000 | 4,500 |
| Total | 30,000 | 15,000 |
Check: 80,000 − 48,000 − 2,000 = 30,000; 30,000 × 60% = 18,000, so 12,000 is included; 30,000 × 30% = 9,000 reserve, so 18,000 − 9,000 = 9,000 is included; the last 9,000 in year 3. T4037 gives the inclusion rate as one-half. Because this buyer pays within three years, the five-year limit does not bite. With a slower buyer, Form T2017 caps the reserve so that the full gain is included by the fifth year even if money is still owed.
The naira problem with instalments
Because the gain is fixed at the sale-date rate, the naira instalments you receive later may be worth more or fewer Canadian dollars than the figure you started with. If the naira weakens over the payment period, the CAD value of what you actually collect falls short of the proceeds you reported. That shortfall is a separate currency question, not a change to the gain; ask a preparer how to handle it. Pricing the sale in US dollars, or asking for faster payment, moves that risk to the buyer.
When you cannot use the reserve
T4037 is plain that non-residents cannot claim a reserve. If you plan to move back to Nigeria while instalments are still due, take advice before you go. Separately, the CRA's emigrants page treats most property as disposed of at fair market value when you leave Canada; foreign land you still own on departure is caught unless an exception applies. Selling a plot to a company you control also rules the reserve out.
Protecting yourself on the Nigerian side
Section 22 of the Land Use Act requires the Governor's consent before a statutory right of occupancy is assigned, and section 26 makes contrary transactions void. In an instalment sale, a seller can hold back the deed of assignment and consent application until the final payment, with the terms set out in a written sale agreement drafted by a Nigerian lawyer. Whether Nigerian capital gains tax applies to your sale, and at what point, is for a Nigerian adviser; if it does, Folio S5-F2-C1 governs the foreign tax credit in Canada.
For a one-off cash sale, see selling a Lagos house: Canadian capital gains; for what the treaty says about gains on property, the Canada–Nigeria treaty and property gains; and for receiving the money, bringing sale proceeds to Canada.
Where Pryme fits
Each instalment can be paid into a Pryme naira balance and given its own dated record, which is what you need to show the share of proceeds received each year. You can generate a verifiable receipt through VerifyDoc.ai for the buyer at every payment (receipts), and convert with Swap when you choose, with the rate shown first.
Questions people ask
Do I pay all the Canadian tax in the year I sell my land if the buyer pays in instalments?
Not necessarily. A capital gains reserve on Form T2017 lets the gain follow the payments, within a five-year limit.
How many years can I spread a capital gain over?
Generally five: T4037 says most reserves run for at most four years after the sale year.
Can I claim the reserve if I move back to Nigeria?
No. T4037 says non-residents cannot claim a capital gains reserve.
Which exchange rate fixes the gain on a naira sale?
T4037 converts proceeds at the rate at the time of sale and the cost at the rate when acquired.
Sources
- CRA: Guide T4037, Capital Gains 2025 (modified 11 Feb 2026) · accessed Oct 2026
- CRA: Income Tax Folio S5-F4-C1, Income Tax Reporting Currency (updated 27 Jun 2024) · accessed Oct 2026
- Bank of Canada: Daily exchange rates (table dated 23 Oct 2026) · accessed Oct 2026
- CRA: Dispositions of property for emigrants (modified 20 Jan 2026) · accessed Oct 2026
- PLAC: Land Use Act, Cap L5 LFN 2004 · accessed Oct 2026
- CRA: Income Tax Folio S5-F2-C1, Foreign Tax Credit (modified 31 Mar 2026) · accessed Oct 2026
This article is general information, not financial, legal or tax advice. Products described are provided under the terms on this site and are subject to regulation and eligibility.