The Federal Budget 2012-13 came into effect on July 1, 2012 and has certain implications for property purchasers and sellers, especially in regard to property taxes. These include:
1. Capital Gains 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 Collector Rate (CR)
- The CR is the 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:
- Less than 100 sq yds – 0% CVT
- 100-500 sq yds – 2% CVT
- More than 500 sq yds – 2.5% CVT
- Less than 1,000 sq ft – 0% CVT
- 1,000-2,200 sq ft – 2% CVT
- More than 2,200 sq ft – 2.5% CVT
- All sizes – 2.5% CVT
Note: This article is written by Mr. Muhammad Shafi Jakvani, CEO – Citi Associates. This article was originally published in DAWN Real Estate Advertiser.