FBR Plans Real Estate Tax Relief

FBR Eyes Major Tax Reforms to Revive Pakistan’s Real Estate Sector

The Federal Board of Revenue (FBR) is preparing a strategic overhaul of Pakistan’s property taxation system. The reforms aim to reduce high transaction taxes and encourage both local and overseas investment, with a strong focus on affordable housing. These much-needed changes are expected to roll out by February 2025.

Pakistan’s Real Estate May Soon Benefit from Lower Transaction Taxes

FBR Chairman Rashid Mahmood has announced plans to reassess the heavy tax burden currently stifling Pakistan’s real estate market. This move is anticipated to unlock investment, improve housing accessibility, and revitalize the construction industry.

What’s the Current Tax Burden?

Currently, buying or selling a property in Pakistan comes with nearly 13% in taxes, including:

• Sections 236C & 236K of the Income Tax Ordinance

• 5% Federal Excise Duty (FED)

• 4% Provincial Stamp Duty

The FBR is considering slashing these rates, especially the 5% FED—but only if provincial governments refrain from increasing their own real estate taxes.

Focus on Affordable Housing & First-Time Buyers

To support the affordable housing movement, the FBR has formed a committee involving key stakeholders from the construction and real estate sectors. This committee is drafting a tax rationalization plan that would:

• Propose lower transaction costs

• Align property valuation rates with actual market values

• Offer specific incentives to first-time homebuyers

This marks a progressive shift towards housing inclusivity and market transparency.

Overseas Pakistanis to Benefit from Streamlined Processes

Understanding the hurdles faced by overseas Pakistanis in investing in real estate, the FBR is planning a digital verification system in collaboration with NADRA. This online platform aims to:

• Reduce reliance on field officers

• Simplify property transaction procedures

• Encourage diaspora investment into Pakistan’s property sector

A Promising Outlook for Investors

These upcoming reforms promise to make property investment in Pakistan more accessible, profitable, and transparent. The expected tax relief, paired with digital facilitation for overseas investors, is likely to increase property transactions and drive long-term growth in the sector.

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