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:

Houses
Plot Size (sq yds)                                CVT
Less than 100                                      0%
100-500                                              2%
More than 500                                     2.5%

APartments
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%