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GOVERNMENT NEW PROPERTY TAX IMPLEMENTATION 2019 - JagahOnline

GOVERNMENT NEW PROPERTY TAX IMPLEMENTATION 2019

The Government Has Made A Strong Decision To Better Implement Current Taxes On The Real Estate Sector. Representing A Substantial Capital Increase Of 129 Percent In Just Six Years.

The Government Has Made A Strong Decision To Better Implement Current Taxes On The Real Estate Sector In Order To Prevent The Prevailing Trend Of Investment In Real Estate Without Paying The Corresponding Taxes.

The Capital Gain From Immovable Property Is Taxed Separately After The Holding Period Of A Property. It Is Taxed At Normal Tax Rates Under Normal Taxation.

1. It Is Proposed That Income From Capital Gains On Open Land Should Be Taxed At 100% If The Open Land Is Sold Within One Year And For A Period Of Up To Ten Years. It Is Also Proposed That Income From Capital Gains From Built-Up Real Estate On Sale Be Taxed On Similar Items Over A Five-Year Period.

2. If A Property Is Sold Within One Year, It Will Be Taxed As Normal Income.

3. A Tax Is Levied On 3/4 Of The Income. If The Same Property Is Sold After One Year.

This Is A Permanent Tool To Lighten Undeclared Money That Violates International Tax Standards. It Is Therefore Proposed To Deduct The Tax Of 3% Of The Difference.

Holding Tax:

The Fbr Had Introduced A Rating Table For Real Estate In Major Cities. The Prices Are Lower Than The Actual Market Value. It Is Expected That Real Estate Fbr Rates Will Be Closer To 85% Of The Actual Market Value.

There Is Currently No Withholding Tax On The Sale Of A Property If The Property Is Held For More Than Three Years. This Is In Line With The Holding Period For The Taxation Of Capital Gains, Which Is Also Three Years.

It Is Proposed To Levy Withholding Tax On The Sale Of A Property Irrespective Of The Holding Period In Order To Adapt It To The Proposed Treatment Of Capital Gains.

Buying A Property Via A Bank Instrument:

In Order To Capture The True Value Of The Buy / Sell Transaction, It Is Proposed That Persons In Immovable Property Acquire A Market Value Of More Than Rs 5 Million, And In The Case Of Movable Assets, One Million Or More A Bank Instrument (Money Order Or Bank Check) As An Owner Check And A Penalty Of Five Percent Of The Fbr Value Of Immovable Property Is Proposed For A Breach Of This Requirement.

Real Estate Offers Random Profits For Investors:

Consider This As An Example Of The Fact That Someone Who Had Invested One Million Rupees In A Property In Karachi At The End Of 2013 Would Have Achieved A Market Valuation Of Rs.2.3 Million In 2019, Representing A Substantial Capital Increase Of 129 Percent In Just Six Years.

Some Of The Major Industrial Groups Have Preferred To Invest Their Retained Earnings In Real Estate – Both Residential And Commercial (Shopping Centers And Restaurants) Rather Than Expanding Their Industrial Base.

The Government Should Relieve Real Buyers By Lowering The Withholding Tax On The Sale And Purchase Of Real Estate. A Threshold Of The Value Of The Property Amount Of Rs. 4 Million Is To Be Exempted From The Tax. The Government Should Introduce Mechanisms To Prevent Abuse Of This Exemption, While The Taxes For The Holding Period Of The Property Should Be Exempted For A Period Of 10 Years.