Home and Land

Home and land taxes in Pakistan.

Home And Land

Real Estate Taxes You Pay While Buying And Selling A Plot

Capital value tax:

Are you in the market for a new home and land investment? It’s crucial to know all the taxes and fees that come with owning a property. According to the Finance Act of 2006, first tax that is imposed is the capital value tax. It is calculated at a rate of 2% based on the recorded value of the property. However, it’s important to note that the recent budget proposal has revised the capital value tax for urban areas to 2 percent. similarly added an additional 3% stamp duty fee. Keep in mind that stamp duty is a separate fee that must be paid for the legal documents pertaining to the property purchase.


Capital Gains Tax:

If you’re planning to sell your property, it’s essential to have a clear understanding of the taxes that may apply to your transaction. Another tax to consider is Capital gains tax. which is a fee that the seller must pay based on the profit made from the sale of the property. According to the Pakistan Finance Act of 2022 (https://download1.fbr.gov.pk/Docs/2022721177241469circular15of2002-23.pdf) this tax is only applicable if the property is sold within the first three years of purchase.

The tax brackets for Capital gains tax are subject to change each year. With a rate of 15% in the first year, 12.5% in the second year, and 10% in the third year. However, after the three-year period, the seller is no longer liable to pay Capital gains tax in Pakistan. 7.5% then 5% and 2.5 in 4th 5th and 6th year respectively percent Make sure to stay informed on the current Capital gains tax rates and regulations when selling your property in Pakistan.


Withholding Tax:

Both the buyer and seller must pay a specific amount called withholding tax. It combines capital gains tax and capital value tax. When they sell a property. According to the withholding tax rates in Pakistan for 2018-2019, buyers who file income taxes must pay a 2% withholding tax. Non-filers must pay 4-5%. This significant difference in tax bracket aims to encourage more people to file taxes. Similarly, sellers of the property must pay a 1% tax if they file taxes, and 2% if they do not (https://pkrevenue.com/withholding-tax-rates-on-immovable-property-transactions-during-2022-2023/)To get an accurate estimate of the tax amount, it’s recommended to consult the Government of Pakistan’s official taxation website for proper property valuation.

If you need further help and consultation regarding property taxes in Pakistan. Contact home and land consultants team or email us 

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