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Property Taxes in Pakistan

Property Taxes in Pakistan:

The government has introduced new property taxes in Pakistan on sale and purchase of real estate. This blog details out all taxes;

Non-filers

Non-filers have been allowed to buy property worth 5 Million PKR or more but they have to become filer.

Property Taxes to be paid by BUYER:

Stamp Duty = 5% as per DC Rate

Withholding Tax = 1% as per FBR Rate

Property Taxes to be paid by SELLER:
Capital Gain Tax (CGT) for PLOTS

A- 100% profit amount/gain to be taxed if plot is sold within 1 year of purchase.

B- 75% profit amount or gain will be taxed if plot is sold within 8 years of purchase.

C- No taxes on profits if plots are sold after 8 years of purchase.

Capital Gain Tax (CGT) for CONSTRUCTED PROPERTY

A- 100% profit amount to be taxed if constructed property is sold within 1 year of purchase.

B- 75% profit amount will be taxed if constructed property is sold within 4 years of purchase.

C- No taxes on profits if constructed property is sold after 4 years of purchase.

Capital Gain Tax (CGT) % Calculations:

5% Tax on profit amount less than 5 Million PKR.

10% Tax on profit more than 5 Million PKR but less than 10 Million PKR.

15% Tax on profit more than 10 Million PKR but less than 15 Million PKR.

20% Tax on profit more than 15 Million PKR.

Withholding Tax (WHT);

A- Withholding Tax is decreased from 2% to 1% for filers. WHT will be collected as per FBR Property Valuation Rate.

B- Earlier there was no WHT on purchase of property if price was less than 4 Million PKR. But now WHT will be collected on all transactions.

C- Earlier there was no WHT if property was sold after three years of purchase. Now WHT will be collected up to 5 years. But if selling property after 5 years of purchase then no WHT.

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43 Comments

  1. Muhammad azeem uddin

    on said  

    Dear Malik sb,
    It comes to my knowldge from news paper that KDA is starting new housing scheme after 20 years. Last they done 1999.
    Kindly share with your readers and analysis it on neutrality.
    Last many times your analysis is based like PTV.
    I further said to you that God is best provider , so don’t take fear.
    Many people have shifted from TV to YOU TUBE, it is because TV what they produce you see but on you tube what you want you see.

    So nowadays an average people see TV. Because it is a LIAR box and nothing else.

    So dont make it PTV or TV. It is my advice and it depends up to you.

    Reply
  2. How do I prove I earned money overseason? through bank transfer or is there any other option too? Is there any tax on income earned overseas?

    Reply
  3. I am a non-resident Pakistani who wants to come to Pakistan to buy a 2 kanal plot and construct a house on it. Do I have to become a filer?

    Reply
  4. It’s not a happy market for property sellers by any stretch of imagination – specially for high value properties which we’ll define for our purposes to start from Rs.2 crores; but if you’re feeling generous then Rs.3 crores or higher.

    Websites or real estate agents could sing all they want about how great things are. Just listen to them with a broad smile and make your own judgement given information at your disposal.

    Most people have had direct personal experience of buying and selling properties over the course of their lives. Or have seen people around them do it. So they might have come across following observations.

    During good times, on average a medium sized property gets sold – at a reasonably decent price – in about 60 to 90 days. It’s an average; quite possible that some properties sell out in mere days while others languish for over a year. But we’re not talking about outliers; instead we’re trying to put a number on the most commonly occurring (or average) experience.

    During bad times, e.g. during the financial crises of 2009, this average tended to move up somewhat to about 120 – 150 days.

    This is basically what I also experienced or observed over the years.

    Until about 2 – 3 years ago, that is.

    Since then, I have seen relatively higher number of apartments in Clifton – Karachi or houses in DHA-Karachi remain spectacularly unsold. It means that the deal averages of 90 days or even 150 days are a dream of the past.

    Now I know of properties in above mentioned areas that have not been sold for much longer – some since even 2013. And situation appears to have become more acutely painful over last 2-3 years.

    Even on Zameen.com one could see same houses on sale for years. Doesn’t matter if they tweak the time lines such that you cannot check before a certain time whether such & such property was on offer then too. You would still remember from your own memory that a house on sale in 2016 or 2017 still appears as available with a hopeful tag line ‘Property added 2 weeks ago’. Oh well.

    Why aren’t they sold? Some possible reasons:

    1. Something wrong with property documents. Maybe … but not with XXL-sized large chunks of DHA & Clifton. So this can’t be a too-significant reason

    2. Unreasonably high prices still pegged by sellers to high points of 2016 or so

    3. Economy going through a down phase

    4. Black money not allowed to play. Or too fearful of exposing itself a la Marilyn Monroe in the windy photo-shoot in that famous white dress.

    Numbers 2,3,4 are likely suspects. Whichever way the blame is to be pointed, the high-value market lies in – to put it mildly – shambles. Heroshima & Nagasaki presented a better picture after atomic catastrophes than do Clifton & DHA.

    In plain language, there is very little possibility of sale in significant enough numbers compared with availability – for Clifton apartments with asking prices of 3 – 6 crores, nor for 500 square yard DHA houses with asking prices of 7-14 crores, and certainly not for 1000 square yard houses with asking prices of 14 – 30 crores.

    Not happening. Nada.

    And if it does miraculously happen, then the bogey man shall come calling to check out sources of income of respectable parties.

    Other than that, good luck to sellers waiting for white money at these levels. Cows might have better chances of learning to fly.

    Marilyn Monroe’s dress might have been white but alas, money available (for these levels) with majority of our esteemed buyers isn’t.

    Reply
    • “Or too fearful of exposing itself a la Marilyn Monroe in the windy photo-shoot in that famous white dress” ….oh man that was hilariously explained a brutal truth.

      Reply
    • Hasan
      Great contribution to the ongoing discussion on this blog.
      I would like to add few lines;
      Last night I was with an estate agent of DHA who is closing his office by 1 October.
      My question was about property market.
      His simple answer was that there are still 1000’s of investors in the market.
      BUT
      THEY WANT TO BUY PROPERTY OF WORTH DOLLAR BY JUST PAYING PENNY.
      Even some want more than 50% discount.

      Reply
    • THOSE SELLERS THINKING THEY WILL BE ABLE TO SELL AT 2016 RATES R LIVING IN A FOOLS PARADISE…THERE IS NO BUYER IN MARKET AND FEW TO NONE TRANSACTIONS TAKING PLACE….THE ECONOMY IS GOING IN RECESSION AND THESE BROKERS R TRYING TO MAKE PPL BELEIVE THAT PROPERTY IS GOING IN BOOM

      Reply
  5. Muhammad azeem uddin

    on said  

    Ali my brother,

    You are 100% correct that as the economic situation is very decline and GDP growth 2.4, car sales decreases 60% and about 18 million people jobless, stock market lost 40%, utility and consumer goods soaring that hit savings,

    But the price of REAL ESTATE is stand on the same level.

    If I conclude why,
    1) The mafia are very financial strong.

    2) some powerful hand behind the wall, who control prices, so we can not see

    3) Foreign remittance inflows about 20 B, that make out Local Pakistanis purchasing power from home and plot.

    If someone says plot and Home prices going down , he is a liar and nothing else,

    Reply
    • Dear brothers,

      If you think the prices are not coming down and would remain rock solid, please invest . I have just shared my experience.

      Reply
    • azeemuddin bhai i beleive your not closely following the trend… there is literally no transactions being done on these prices while prices have started to take a shock now….even some ads have started coming on zameen.com of 300 yards plots dha phase 8 khi sahil streets for 2.85 cr now which was previously 4+….change has started and it will not stop at this it will be a huge crash…ppl holding property wil be in trouble and will loose further….
      even 500 yards has started coming up for 3.25 in dha phase 8…market has started to shake….just wait and watch it crumble as economy is going in recession and no buyers in market…

      Reply
  6. Pakistan is in recession whether we admit it or not. We don’t know how long it will remain like that. On the top of that world economy is also heading to recession and I don’t know how it will impact Pakistan. Last time we survived but this time situation is ambiguous.
    Second thing no country in world will grow just based on things related to Land i.e. agriculture, oil, mineral, real estate etc. We were and we will always be on survival mode if we don’t change our attitude towards business model. Industrialization is only solution but looking at current scenario I can say we already miss train of industrialization. “Hamesha daer kur deta hoon main hur kaam kernay main…” Muneer Niazi

    Reply
  7. Jamshed

    on said  

    Reasonable price for DHA defence KHI 500 yards plot should be no more than 2 crore and of house from 4 to 4.5 crores.

    Reply
  8. The sellers have tremendous holding power they are still asking 5 to 6 chores for a 500 sq plot in DHA khi which is not worth that much
    God only knows when the time will come to buy

    Reply
  9. THE MARKET IN KHI IS TOTALLY DEAD AT THE MOMENT THERE ARE NO OR VERY LOW TRANSACTIONS ON CURRENT PRICES…PANIC WILL START TO GRIP IN A MONTH OR 2….BUYER IS NOT READY TO BUY ON THESE PRICES…SELLERS IF HOLD WILL LOSE IN REAL TERMS AS RS DEVALUE …THEY NEED TO SELL AND THEY CANNOT FIND BUYERS..

    Reply
  10. Jamshed

    on said  

    There is no sale , purchase at present on asking price rates. Sellers are reluctant to sell their properties 40 to 50 percent below the asking prices. Last week , one 500 yard villa in DHA phase 6 was sold at 6 crore in Khyaban Bahria. The real estate agent was telling me that there is no buyer in the market. Distress selling is going on at 40 to 50 percent below the asking price. This would take 6 months to 1 year for the actual market value of the real estate and that would be probably 50 percent below the current prices Any how , real estate has lost its shine.

    Reply
    • Jamshed
      Thanks for regularly updating the forum with the current market trends.
      40-50% price fall in next one year + currency devaluation + 30-40% decline from 2016-19.
      So Pakistan Real Estate Market is falling in the style of Dubai Real Estate where property prices are 75% down from peak of 2018.

      Reply
  11. Those who purchased property before 1st july 2019 will also come under 8 years tenure of capital gain tax or old rule of three years will apply on them?

    Reply

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