TAXES ON IMMOVABLE PROPERTIES

Tax

After having gone through many websites and blogs, for assessing the information available there upon, regarding application of taxes on immovable properties, I have come to the conclusion that there is too much information available on these sites, which in most of the cases is difficult to understand. The information seeker could not get the desired information instantly. Instead he has to read the whole article from top to bottom and even after reading the whole article he could not assimilate properly.

As such, I have decided to present the information concisely with specific reference to buyers and sellers. The rates of taxes are as per Income Tax Ordinance 2001, amended up to 30th June 2017. Anybody wishes to seek the detail information, may refer to the link mentioned at the end of this article.

Taxes Applicable on Sellers

  1. Advance Tax

(Section 236-C of the Income Tax Ordinance 2001)

Advance Tax on sale of immovable property shall be applied as follows, provided the holding period of the property is more than three years.

  • Filler 1% of the amount of consideration received
  • Non Filler 2% of the amount of consideration received
  1. Capital Gain Tax

(Section [(1A) of section 37] of the Income Tax Ordinance 2001)

Property Acquired
S. No. Holding Period After July 01, 2016 Before July 01, 2016
1. Less than 1 Year 10 %
2. Equal to I Year but less than 2 Years 7.5 %
3. Equal to 2 years but less than 3 Years 5 % 5 %
4. More than 3 years 0 % 0 %

No tax shall be payable for immovable property allotted to persons mentioned in sub-section (4) of section 236C.

Taxes Applicable on Purchasers

  1. Advance Tax

(Section 236-K of the Income Tax Ordinance 2001)

Advance Tax on purchase of immovable property

  • Where value of Immovable property is Up to 4 million 0%
  • Where the value of immovable property is more than 4 million

Filer:               2%

Non-filer:       4%

  • Capital Value Tax (CVT)

The Capital Value Tax (CVT) is chargeable @ 2% on all transfers of immovable properties of 500 Sq.Yds and above. Since the implementation of 18th amendment the subject tax has become a provincial tax.

Links:

Federal Board of Revenue

Taxing Capital Gains

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