Budget 2019-20 has been announced and it brought numerous reforms in all sectors of Pakistan including real estate and that will surely impact the market and will apply on buying and selling both procedures in its own ways. Widespread tax reforms have been anticipated for streamlining the issues related to the real estate sector. Following are some of the real estate-specific taxation highlights:
- Only FBR rates will be prevailed
- FBR Property Valuation Rates to be raised to 85% of market value
- WHT has been reduced from 2% to 1% on transfer of property and will be imposed on all
- The rate of WHT levied on the purchase of property has been reduced from 2% to 1% of its total value.
- Non-filer can purchase property having worth more than 5 millions
- CGT at a normal tax rate
- New Capital Gains Tax Regime for immovable properties
- Banks will now be more involved in all real estate transactions
- Although non-filers have now been allowed to purchase properties individually valued higher than PKR 5 million, all such acquisitions will have to be processed through crossed banking instruments – otherwise, the property pursuant would be required to pay an additional 5% penalty on the FBR value of the real estate considered.
- The time limit has been extended for Tax exemption on the selling of property
For Plots
- Plot sold within first-year tax rate will be 100% on the gain
- After the first year but before ten year tax rate will be 75% on the gain
- After 10 years no tax will be deducted
For Constructed Property
- 100% on the gain in the first year
- After the first year but before fifth year tax rate will be 75% on the gain
- After 5 years no tax will be deducted
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We hope that this post has well described all the changes in taxes on property sale and purchase in the budget 2019-2020. These changes in taxes will be effective from July 2019 after formal approval from the assembly.
Guest Post by Mr. Muhammad Ejaz
Guest Post by Mr. Muhammad Ejaz
Sur kindly thora detail ma samjhay
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