Is the current property boom over ?

Buying Property General Advice
#127

Frankly speaking, current government approach for common/poor man is to provide jobs (no matter what pay) due to covid crisis. Working class folks lost jobs due to COVID losses so PTI’s focus is on increasing employment. They’re achieving that by boosting construction sector which also provides lots of employment.

Obviously none of the details are fabricated but their importance is highly exaggerated to manipulate market. And this is not a bill, it is a proposal for new taxation. These proposals are not amended, they are either accepted or rejected as they are not bills. So far most of these new taxation proposals by FBR have been rejected by finance ministry and senate. This will be no different I believe because there is no way government increases CGT because if they do, builders will suffer massive losses and construction industry will come to a halt.

#128

Some part of this is true. What is proposed is that if you buy and sell properties to make profits, you will be taxed under normal tax regime which would be like income tax. However, proposal doesn’t specify possession of how many properties would be a habitual property trading to make profit. For example, an individual could have three properties which he has shifted from different areas but they could justify it by saying it is for his children (one for each) and they are simply shifting those properties as per their children’s needs.

And this proposal does not apply to rental. Rental income is already taxed normally under different brackets.

@arshadwazir This proposal is not practiced anywhere else in the world. Everywhere else in the world, property trading is not considered as normal income… they are taxed normally like WHT and CGT. This proposal by FBR is ridiculous.

@yousafnoor FBR needs to be digitalised. That is the main issue with FBR which Shaukat Tarin is attempting to solve this year. Some of these FBR folks have no idea on how taxation works, they send dummy proposals and expect they will collect ‘X amount of tax’. What I mean is right now the government is collecting more tax from real estate than ever before in history. FBR thinks that if they increases taxes by 200% we will collect 200% more taxes but that is completely wrong, they will be collecting even less taxes than right now because number of transactions will become almost zero if taxes become that high. These baboos think transaction rate will remain same if taxes are increased that much which is insane. They have no sense of reality as they are not involved in real estate market.

#129

Reality check …

– The FBR/SECP that will will ensure to tax you and me to the last bone in our body

– The Govt that is comittee to provide us Jobs.

Labours, perhaps yes, high end, capability needing jobs from Railway to NADRA to PIA to SUPARCO and you name it, have gone to already retired souls who have got successful first innings of full time job and now making even more in new job about which they don’t have an iota of experience …

#130

FBR is not as competent as you think. It is not as tough and sturdy as the IRS of USA, infact far from it. If it was competent, we wouldn’t have 50% of the country evading and not paying taxes. In the US, if you don’t pay taxes they just take away some of your possessions or even land. But in Pakistan, FBR only nicely tells you ‘please pay taxes’ which most people don’t listen to.

And FBR is not very strong when it comes to having influence in proposals. All it does is propose taxation but it is final say of government/senate if those taxes will be introduced.

And that news link you sent is nothing… Saleem Bajwa is corrupt to the core but he is untouchable because it will be bad look for army. No one is investigating Saleem Bajwa, it is only media organisations who are investigating him like Fact Focus. In fact, SECP is supporting him in this case by removing information of his corrupt businesses.

#131

@Asad this is not true that FBR has no teeth. It has enormous powers to check and seize your bank accounts and recover any tax liabilities due. You are then free to go to tribunals and courts to challenge the decision.

My point is different and address the systemic problem. That is, FBR, or any govt institution for that matter, is a mere pawn in the hands of those who control the show. And they also control all the money that is collected in taxes, earned in exports and sent by you faithful guys from overseas.

Of course, you don’t have to buy what I sell. So the best approach is to look at the budget and expenditures yourselves and see how much is allocated for people. Any govt, of the people, for the people, by the people, would increase developmental spending to increase growth and jobs. Whereas, this govt is banking on unspent development allocations to cut deficits.

So if you don’t spend on health, education, infrastucture, then how can you improve quality of lives and increase jobs.

#132

I don’t know the details of the proposed law by FBR. My reply was in general to explain the CGT and that concept is the common practice in most countries.

#133

Yes, FBR needs to be strengthened!! Agreed 100%

However it will never, unless it protects those who pays. Tax is not just on income. It’s on every single item incluidng infants milk and life saving drugs. In response, FBR/Govt. is spine less in protecting it’s citizen’s right even in consumer court. Rest is too much to ask. Tax is money extortion unless geniune incentives for those who pay, not to penalize.

‘Redarding bills these are are usual wardaat like OGRA nay Petroleum Masnooat main 12 rupay Izaafa ki Summary Wazeer Azam ko Bhijwaa Dii. Wazeer Azam nay Awam Ko Relief detay huay sirf 4 Rupay Kay Izafay ki Manzoori dii.’

Regarding Powers of FBR!! Here is a reality check:

#134

I am watching current budget discussions in senate. Shaukat Tarin himself said that they will not introduce new taxes, they already rejected the 10 billion taxes they were to impose on salaried persons. He has once again mentioned that IMF targets for taxation (5.8 billion) will be met through widening of tax base by third party auditing of FBR. This is a very good move as taxation will increase without further burdening salaried persons and common man. It is crystal clear that real estate will face no new taxes, it is just FBR playing dumb games. Power is in the hand of Shaukat Tarin and senate to approve taxes and it seems clear that he will not introduce these new taxes on real estate.

#135

@Asad dear, this is the 4th Finance Minister of this govt who is presenting 3rd budget. In all 3 years, FBR has not met it’s original targets even once and had to seek revisions.

I hope Tarin is incharge. But Shabbar Zaidi who quit chairman FBR position tells it is someone else.

I want to believe in this govt, but how can I ? Three years of their performance in center and 8 years in KPK tells horror stories. and yet the minister defense says on the floor of the house that there is no poor in KPK.

I feel good for my KPK brethern. But I am looking for that weed that makes you see green everything.

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#136

@isloo001 bubba, Khattak got one special man whose only duty is to fill/roll the joint…

#137

Tax targets for current financial year were initially 4900 billion but that was set by IMF before corona-related losses hit. They have been revised to 4717 billion after IMF took into account corona losses. We have collected 4167 billion in taxes until May and in fact for last few months, we have been outperforming monthly tax targets. Right now there is need to collect 547 billion in taxes this month but it is expected we will collect somewhere between 400-500 billion which I feel is a success although we will miss the targets by around 50-100 billion.

IMF original targets are way too high, they take the approach of ‘shooting for the sun and reaching the moon’. I believe on taxation, we are on the right path and have been doing very well. Every month, every year our taxation is improving and getting better. The issue of changing finance ministers is different topic. I believe the constant changing of finance minister is to save face from public and the way I look at it, they are just scapegoats for some of IK’s policies or failure. For now, Tarin and IK seem to be on same page for economy.

And I just want to add that I am seeing positive signs when it comes to taxation and for real estate. I have been constantly saying the outlook for real estate is positive for this upcoming financial year.

#138

@Asad, I sincerely hope you are right about RE prospects, but this Same Page thingy is like a Macbeth curse for me.

@Ilyas bro, do you have number of that man by any chance. I desperately need it, before any self-appointed Firdous Ashiq of the forum picks on me. :slightly_smiling_face:

#139

@isloo001 bubba, He happens to be my only dealer in isloo and he is khattak’s villager… i am shooting that contact number in your email…

#140

Govt lowers taxes on food, auto, IT, real estate, refinery - Pakistan Today

"Similarly, the tax rate on real estate has been reduced. Under the construction package the ratio of income tax has been reduced from 35 percent to 20 percent. "

Now I don’t know which tax this is but it has been reduced. Is it some tax for builders?

#141

Made a video to answer this question. Her is the link:

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#142

I think we should main this a main thread for general discussions of real estate market.

State Bank of Pakistan maintains policy rate at 7% (geo.tv)
Some interesting news. I believe as long as interest rates remain low, real estate will not see any correction. Govt seems clear to be growth-aligned and interest rates will remain low until at least mid 2022 and possibly 2023. So I truly believe real estate will continue seeing slow growth, some rises and stability until then.

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#143

Some more very interesting news:
Projects in pipeline: Tarin agrees to review SCP extension request - Pakistan - Business Recorder (brecorder.com)

Amnesty extension till 31st dec is on the cards and being reviewed by finance minister.

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#144

great news asad brother. thanx

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#145

I don’t think that this gonna be as easy as in the past.

Following things won’t allow govt to extend the amnesty scheme.

  1. FAFT has very strict policies regarding these kinds of amnesties schemes. they said that this could open the door for terror financing. you can google about it to get more information.

Following are the news in which you can get the idea that it’s not easy to extend it.

there is a lot more news that you can find on Google or in the news channels. FATF has a very very strict policy on it. means if you want to get out of the grey list. you cannot give these kinds of amnesties and Pakistan is very serious to get out of the grey list. that’s why govt has taken the above steps (in the news) to fulfill the FAFT criteria.

Let’s move on to point 2 :smiley:
2. IMF is not in the favor of any kind of amnesty. here I’ll show you only one news source rest you can find on news channels websites.

govt already extend it from December 2020 to June 2021 cus of the covid 19. but unfortunately, it seems that the IMF didn’t allow it to extend further. otherwise gvot will extend it in June 2021. however, IMF freezes all bailout packages for few months. cus PTI doesn’t want to impose more taxes on the nation.

  1. this amnesty has a 2nd deadline till March 2023. but after 30 June 2021, you won’t be able to buy plots/land directly. however, you can still invest your black money in the project that is already registered in FBR under the amnesty scheme.

there are a lot more things that relate to local politics. but I don’t want to touch them at this time.

at the end. let do some postpartum of the current above news.

1st Business Recorder is not a very well-known newspaper in Pakistan and I’m unable to find this news on authentic news channels.

2nd Shaukat Tarin said that he will review it for the projects that are already in pipeline. means that the bank account was opened and registered on the FBR website. but they didn’t buy the plot/land due to some issues. or was not able to start construction on it. he didn’t say anything about 6-month extension or something like that. So maybe they are able to facilitate the projects that are already in pipeline. but it could be for a couple of days or for some weeks it’s not going to extend for another 6 months for sure.

#146

FATF does not have any direct link to amnesty. Amnesty scheme can go on and the govt can still achieve their FATF targets. Sounds contradictory so you wonder how is that possible? The govt has to show progress by asking documentation from real estate agents (which they’re already doing) and jewellers. Using this information, they will try to catch persons who are involved in very illegal means such as terrorism. They need to show progress that ‘hey FATF, we have caught X amount of bad people’. They don’t have to catch every person involved in shady business out there, just the ones they think are dangerous like involved in terrorism or enough people to show progress.

FATF’s next meeting is next year now a long time away. Govt can extend amnesty till 31st december and still do enough after that in time to look good for the meeting. Hahahah, forget IMF. Govt has already trashed IMF’s plans and guidances by not implementing a lot of taxes. Back in March or April, Dawn put out a story that IMF was going to impose huge amount of taxes. Govt rejected almost all of them, that tells you who has the power in that balance.

Yes it does look like they’ll give the extension to those who had initiated process of using amnesty. Still, it is good news as it means even more construction and development. If they do extend, it’ll definitely be till end of year. I will mention this too that ABAD Chairman had mentioned that Sindh govt had been asking for bribes to those apply for amnesty scheme so many were put off by that. Maybe government extends amnesty outright to accommodate those.

As for brecorder’s credibility, don’t know much about them. I have read about some of their articles but this news came a day after ABAD chairman made statement and plea to extend amnesty scheme. I can only trust that there would be some truth to it. We will see in a week or so if government announces anything regarding it.

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