Are you doing property business or have some of your income related to property and wants to know how to calculate the income tax payable on your property? If yes, then you have on the right place. In this blog post are going to discuss everything you should know about the division of your property income and the taxes payable on it according to the latest tax rates in Pakistan.
Property Tax in Pakistan:
The finance bill 2022-23 has made significant changes to the property taxes. The monetary threshold requirements for Capital Gain Tax are now withdrawn. Instead, immovable property is classified into three types.
- Open Plots
- Construction property
The applicable rates are listed below.
|S.No||Holding Period of Property||Rate of taxes|
|Open Plots||Constructed Property||Flats|
|1||Does not exceed one year||15%||15%||15%|
|2||Exceeds one year but does not exceed two years||12.50%||10%||7.50%|
|3||Exceeds two years but does not exceed three years||10%||7.50%||0%|
|4||Exceeds three years but does not exceed four years||7.50%||5%||0%|
|5||Exceeds four years but does not exceed five years||5%||0||0%|
|6||Exceeds five years but does not exceed six years||2.50%||0%||0%|
|7||Exceeds six years||0%||0%||0%|
The main features of the proposed changes are as follows.
- Same rates of taxes on all types of properties if sold within one year of purchase
- No property tax on flats if the holding period exceeds three years but does not exceed four years.
- Higher rates of tax on Open Plots.
- If the purchased properties are sold after one year then taxes are reduced.
- The proposed changes will encourage more investment in flats as rates of property taxes are lowest on sale of flats.
- Lastly, property taxes are only applicable in properties held in Pakistan. No taxes are payable on properties held outside Pakistan. This will encourage overseas Pakistanis to make more investments in foreign countries.
If you require any further information, feel free to contact us.