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The Impact Of The Budget (2012-2013) On Pakistan’s Real Estate Market


The Impact Of The Budget (2012-2013) On Pakistan’s Real Estate Market

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:

Houses

  • Less than 100 sq yds – 0% CVT
  • 100-500 sq yds – 2% CVT
  • More than 500 sq yds – 2.5% CVT

Apartments

  • 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

Commercial Property

  • 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.

Citi Associates – Real Estate Consultancy, Brokerage and Investment Services

Comments (1)

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  1. Habib Ur Rehman says:

    If I say that due to 2% federal tax on purchase of properties worth more than 2 million and above, the property prices will fall drastically. I am making this statement on the premises that 2% itself will not make any difference but the documentation so done would enable to catch the investors for justifying their source of investment. Thus only buyers with white money will be able to buy the properties.

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