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Pakistan Property Tax 2017

Pakistan property tax 2017-2018

Mr. Ishaq Dar presented the historic 5th and final budget of his current tenure as finance minister on Friday 26 May 2017. Taxes have been decreased & increased for different goods and sectors. Whereas real estate and construction sectors are concerned, budget once again failed to provide the much sought after relief by realtors. According to Mr. Ishaq Dar, all hard decisions have been taken to clean the real estate sector of black money and property speculations; a good move indeed.

Here is the outline of important points of budget 2017-18 related to real estate and construction sectors, Pakistan property tax 2017-18;

CAPITAL GAIN TAX

Capital Gain Tax on the sale of immovable property has been increased once again in the budget 2017-18. According to new laws, 15% CGT tax for filer on sale of property within 3 years of purchase and 20% CGT for non-filer. There is no difference in rate like previous budget, if property is sold out within one or two years of purchase. There are no changes in withholding tax.

TAX RELIEF FOR BUILDERS AND DEVELOPERS

The government has criticized the builders and developers for less contribution in tax during the fiscal year 2016-17. ABAD just contributed Rs110 million rupees in taxes as compared to Rs2.6 billion rupees in fiscal year 2015-16. In last budget, taxes were imposed on builders according to cities and type of construction, which have been withdrawn in this budget.

CEMENT AND STEEL WILL BE EXPENSIVE

This is the bad news for the people who want to build their homes. The government has increased the Federal Excise Duty (FED) on cement from Rs 1 Rupee per kg to Rs 1.25 rupee. Similarly, taxes on steel have been increased from 9% to 10.5%. Many construction experts have criticized this move, as it will increase the home construction cost.

INSURANCE OF SMALL HOME LOANS

The government is launching Risk-Sharing Guarantee Scheme for the low income people. The government will provide 40% credit guarantee cover to banks and development finance institutions (DFIs) for home financing of up to 10 LAC. The government has allocated Rs6 billion for this purpose.

GOOD NEWS FOR OVERSEAS PAKISTANIS

The Capital Development Authority will announce a separate sector for the overseas Pakistanis to make secured investment in real estate.

GWADAR, CPEC SPECIAL DEVELOPMENT FUNDS

The government has allocated Rs180 billion for development of CPEC and many other developments. The projects include New Gwadar International Airport, 200 bed hospital, 200 MW power plant, desalination plant and Gwadar master plant.

Recommended:
Taxes to be paid by property buyer and seller

(29) Comments

  1. Ali

    on   said 

    I have question when will the rates for property for the year 2017-2018 be released? All I see is the older rates. Many Thanks!

    Reply
      • K T Murad

        on   said 

        CGT on immovable property at 15% and 20% respectively ? Where are you getting these numbers? Maximum CGT on sale of immovable property is 10% with other slabs of 7.5%, 5% and 0% respectively. I think you are mixing it with CGT of securities i.e stocks. Please re-check and my concern is right, than correct or statement for readers. Thanks.

        Reply
        • K T Murad
          CGT on sale of immovable properties was increased in budget 2017-18. Its still not implemented. The new taxes will be implemented soon. If new taxes are not applied I will definately amend the blog.
          There is lot of confusion at the moment.
          As, FBR has not increased the valuation as expected by 30% and has delayed it indefinitely.
          The new stamp duty and taxes will be implemented soon.
          I will amend the blog accordingly.
          Many thanks for useful information.

          Reply
  2. Zameer

    on   said 

    I have a question,
    I’m a non file, purchased a plot back in March in Bahria Ph8 Rawalpindi
    If I sell in next few months how much tax I will have to pay … Let’s assume I sell it at 6.2 million (10 Marla plot)

    Reply
  3. saad Noor

    on   said 

    wao. Once again development budget for Gwadar. Gwadar is game changer and will uplift Pakistani econmy. Pleade tell me good project for investment in Gwadar.
    Thank

    Reply
  4. Muhammad azeem yddin

    on   said 

    Sir
    I have read your views and have to concluded that in pakistan their is no economic laws are applicable.

    You can not predict about any things based on science background.

    regarding property prices it would downward or upward their is no laws.

    just wait if it is downward thanks to god that people may have get their home and if not then like fasting be patient.

    property and stock are being controlled by few hands and it depends upon their wish. they want to increased or decreased it would.

    Reply
  5. Overseas

    on   said 

    Dear Ghar 47

    Indeed you are a great source of information to overseas people.

    This time ABAD has achieved removal of tax which was placed in last budget. Thats why they are keeping quite.

    I personaly think on the current market that the prices of houses will be stagnent due to :

    – a general tendency of seller to pass on the unwanted effects i.e rise in CGT or other taxes to end user. I have such experience recently.

    – Reduction of transection due to required holding period would also supports my view. Here the sufferer is property dealer.

    Impact of increased cost of construction due cement and iron taxes would also add to the prices of houses. This is also going to be passed on to end user .

    – Overall impact is stagnent prices of houses.

    I would appreciate the contrary or the supporting views from expert that certainly may give a general ideas to overrseas people.

    Regards

    Reply
    • Overseas
      Many thanks for supporting GHAR47

      I would like to explain what is coming in Pakistan;

      I am reader of many western blog, mostly economic blogs, just to know the trends.
      I love reading Greg Hunter’s USAWATCHDOG as its not controlled but you can post opposite view
      I have no education about economy but simple understanding about world economy and trends

      Western countries economy is due to enormous debts and bonds / stock / shares

      My understanding is that in western countries, house prices are artificially high due to abnormally historic low interest rates. In PAKISTAN property prices are abnormally high due to black money and property mafia.
      CHINA is trying hard to destroy petrol-dollar romance of 46 years by new gold backed currency YUAN. This will destroy petro-dollar, which will raise the interest rates in western countries and will crash the house price.
      In Pakistan crack down on black money is very near, might be just weeks away and this will be the biggest price crash in history of Pakistan. Its coming.

      WE ARE GONNA SEE WORLDWIDE HOUSING PRICE CRASH BIGGER THAN 2008.

      NOW FOCUS ON BUDGET 2017-18 AND ITS EFFECTS ON REAL ESTATE SECTOR

      1- People who want to construct their homes for living will pay more for construction as storm of inflation is on us due to deficit budget. Steel and cement are gonna expensive.
      2- Dealers (not every estate agent is corrupt) will see their earnings slashed due to low volume of sales
      3- Due to high CGT, people will hold the properties and this will decrease the sale of properties and prices will fall as speculation will hit hard.
      4- Yes, ABAD is happy as their taxes withdrawn
      5- Mr. Ishaq Dar has made it clear that high capital gain tax will clear the real estate sector of black money; yes he is right.

      PROPERTY CRASH IS JUST WEEKS AWAY IN PAKISTAN

      I am the only person who is writing about the effects of PANAMA CASE on real estate sector.
      Honorable court will soon give the direction of corruption free Pakistan, where money cannot be laundered and no plea bargain. Its real and coming.

      When my PRIME MINISTER and his family is scrutinized, I will not spare a single filthy black money person.
      PEET CHEER KAR PAISE NIKLAIN GE

      HOW MUCH PROPERTY PRICE WILL FALL AFTER THE CRACK DOWN ON BLACK MONEY

      SIMPLE MATH
      A person can buy property by spending 5 years of income.
      Lets say a professional earn 1 lac. 12 months salary is 12 lac. 5 years salary is 60 LAC.

      5 MARLA / 120 yards house average price in Lahore, Karachi & Islamabad is 1 CRORE. So a professional cannot but 5 Marla / 120 sq yards house.
      So I foresee, 40-50% price crash in Pakistan. Whereas, world wide, experts are predicting 50-75% property price fall.

      Reply
      • rizwan

        on   said 

        INSHA ALLAH GHAR47 IF UR READING OF THE CIRCUMSTANCES IS CORRECT..THEN AP K MUN MAIN GHEE SHAKAR….AS WE GENUINE HOME BUYERS WILL BE ABLE TO BUY OUR HOME WHICH UPTIL NOW WE R LIVING ON RENTS WHICH ARE VERY HIGH….IN KARACHI I THINK MAFIA OF PROPERTY DOSENT WANT MIDDLE CLASS AND LOWER CLASS TO STAY ALIVE AS PROPERTY PRICES ARE SOOOO HIGH…BUT SADLY I DONT SEE ANYTHING U SAY HAPPENING IN PAKISTAN….BUHAT ZIADA HUA B TU IT MIGHT STAY STAGNANT BUT NOT DECREASE LETS HOPE FOR THE BEST AND PRAY PRICES CRASH IN SHA ALLAH

        Reply
        • Rizwan
          We have reached a point where prices must fall otherwise property is out of reach for middle class people. Who can buy even small houses with white money? Crackdown on black money by courts is on the way, just weeks away. Only this will make the houses affordable for masses. But still good move by Ishaq Dar as he has increased the capital gain tax, which will decrease speculation and property price will fall.

          Reply
  6. saad Noor

    on   said 

    Construction cost increase ho gaye ge. Ghareeb admi ko budget ka kia faida.
    steel mehnga
    cement mehnga
    our barsat main bricks mehnge

    Reply
    • Qndeel Fatima
      Yes, according to many experts people have to now hold the property for at least three years
      This will decrease the volume of transactions
      20-30% price fall is expected this year.

      Reply
  7. Ali ahmed Khan

    on   said 

    Proprty dealers have been nailed by this budget but no protest. Lagta ha dealers bhee qoom ke terhan soo rahe. yaar haraan ahista bajana qoom so rahee.
    hahaha

    Reply
    • Ali Ahmed Khan
      Its true
      Property dealers are sacrificed by ABAD
      As taxes have been withdrawn for ABAD as taxes on construction were levied in last budget but withdrawn now.
      This is why no protests by dealers.
      Their bread and butter has been snatched as volume of transactions will decrease.

      Reply
      • Bukhari

        on   said 

        Can you please also advise what CGT rate and WHT rate will be applicable for residential, commercial plots held for more then three years? Previously, these were exempt. Is that still the case?
        Thanks

        Reply
        • Bukhari

          Buyer – File

          Corporation tax / Town Tax or Registry Fee = 1%
          Stamp Duty = 3%
          Capital Value Tax =2%
          Withholding Tax = 2%
          Total tax to be paid by buyer who is filer = 8%

          Buyer – Non Filer

          Corporation tax / Town Tax or Registry Fee = 1%
          Stamp Duty = 3%
          Capital Value Tax =2%
          Withholding Tax = 4%
          Total tax to be paid by buyer who is filer = 10%

          Seller – Filer

          Withholding Tax = 1%
          Capital Gain Tax as;
          15% CGT on sale of properties within 3 year of purchase
          0% CGT on sale of properties after 3 years of holding period

          Seller – Non Filer

          Withholding Tax = 2%
          Capital Gain Tax as;
          20% CGT on sale of properties within 3 year of purchase
          0% CGT on sale of properties after 3 years of holding period

          Reply

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