Sunday, July 15, 2012

The Impact of Budget on Pakistan's Real Estate Market

The federal budget 2012-13 came into effect on July 1, and has certain implications for property purchasers and sellers, especially in regard to property taxes.
These include:
1. Capital Gain Tax (CGT)
  • CGT has been re-introduced in Pakistan after a passage of 26 years; it was lifted in 1986.
  • CGT is imposed on residential and commercial property owners who are reselling a property within two years of purchasing it. It is payable at the time of selling a property.
  • CGT is calculated as a percentage of the increase in the value of a property in a given period; 10% CGT will be applied on property that is being resold within one year; five percent CGT will be applied on property that is being resold within two years.
2. The collctor Rate (CR)
  • The CR is official value of the property and is decided by the Government; it is used to determine the value of several property taxes including Capital Value Tax, Registration Fee and Stamping Fee.
  • The CRs remain have not changed this year and vary according to where the property is located.
3. Capital Value Tax (CVT)
  • CVT is payable to the Government when a property is purchased; it has not changed this year.
  • CVT is determined as a percentage of the Collector Rate; it varies according to the type of property. The details are as follows:
Plot Size (sq yds)                                CVT
Less than 100                                      0%
100-500                                              2%
More than 500                                     2.5%

Covered Area (sq ft)                            CVT
Less than 1,000                                    0%
1,000-2,200                                         2%
More than 2,200                                   2.5%

Commercial Property
Covered Area (Sq ft)                          CVT
All sizes                                                2.5%

1 comment:

  1. Thanks for posting this information and I appreciate it also. I know how this information is very important on real estate in Pakistan and it is my honor to drop by here and get some info on it. Keep it up and keep on sharing.:)