I think we should call spade a spade. Dubai market saw one crash in 2008 but that was very much predictable as the market wasn’t mature and sudden bubble formed there. However they have learned from their mistakes unlike Pakistan where there is no learning from past mistakes. Dubai market is quiet stable and it is evident from the fact that recent oil crash didn’t impact it much. Rental yield is really attractive. Pakistan also has currency risk which is quiet major issue compared to UAE. Those who earlier compared last three years should compare last 10 years and take into account rental/ currency and capital gain into account and Dubai will far out rank Pakistan. Plus you don’t have qabza mafia In uae compared to Pakistan.
However I am not advocating investing outside Pakistan as a overseas Pakistani myself. However I wish our government could show the same sentiments and help attract investment as we have a gem of a country with so much potential
(Admin has locked my original ID (Isloo) which I cant seem to recover, so now I am participating with this new ID.)
On the topic of this thread, the new tax measures will definitely impact adversely on real estate market, now because of higher tax rates, but because of bigger net to catch the fishes. Now it becomes extremely difficult for filers / non-filers to park their black money in property. Higher CGT (10%) on increased holding period (5 years) means that property flipping will not remain a profitable option.
Overseas Pakistanis should prepare themselves to benefit from this situation. They should file their zero-tax to become filers and enjoy full benefits of their white money remitted to Pakistan through banking channels.
Dubai market gained due to Arab spring, but it is not holding up anymore and consistently sliding down since last year. Compared to Dubai Pakistani market is still promising.
Dear Junaid, just for correction about the crash in 2008, it didn’t happened just in Dubai, it was in whole in world mainly in US,UK and in UAE, and it was not just property, it was a crash in every category of business, due to which people run away leaving their homes and cars at airport after losing jobs and loss in businesses. After that the UAE marketing is progressing steadily and it’s not like before.
Dear Isloo1, Dubai market is coming down but it’s a small correction for the enormous increase from 2010-14 period. However it’s nothing compared to the major increase in property prices witnessed before the small correction. Going forward it will remain stable. The increase is not due to Arab spring as top 4 investors in uae property market are Pakistanis British Saudis and Iranians
Dear Imran ur point is valid and the bubble formed in uae marker burst due to global financial crises
Again as I said earlier, I sincerely pray that Pakistan Real Estate market is properly regulated so our whole country can benefit out of it. However thing keeps getting bad and this new tax will have serious impact on turnover. We have enormous amount of land but it’s wasted and not utilized as per it’s potential. Ishaq Dar has all his investments outside Pakistan and major share in Dubai so we know where his personal benefit lies
@Isloo eid mubarak... And all others who cannot log in with old ids...
follow these steps
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Thanks Dk dear and Eid Mubarik to you and to all forum members.
Indeed I tried the above procedure many times, even before but nothing happens. I guess admin is sleeping as usual.
Junaid, this 'small' correction is spread well over an year now. All analysts e.g. JLL, Clutton, etc., predict continuous down trend due to oversupply and low demand. The last hope is Expo 2020 that will resuscitate the market a bit but after 2017 and only for a brief period. So in a nutshell, unless something mega happens, the Dubai bubble is burst for good.
Pakistani investors in Dubai are stuck now, can't bring back their black money. Now if Pakistan makes a law on the lines of US FATCA, making Dubai authorities provide bank and property details of Pakistan nationals, then you will see the panic there.
Finally, Gawadar will be the last nail in Dubai's real estate coffin.
Just to share my experience guys.
I am overseas pakistani and purchased 5 marla house in a society in the rawalpindi city back in 2011 price was 4.5 million that time , its on rent from the day one my tenet called me up last month and said there is a income tax notice and I have to pay 857000 ruppee within 45 days ...i was bit tense but happy too that atleast our government departments have started working any how I called the Commissioner who send the letter she was very good over the phone and guided me to submit mt returns and since I am overseas my income is exempted from tax only I have to prove my source of income that it was white money ,,any how I paid 15K to a accountant who entered my returns online and went to government office to show my all documents and notice was withdrawn...so I think if you have purchased property with white money nothing to worry ,,
I have recently sold my plot and the transfer date is fixed on 20th July. I spoke to my agent in Bahria Town Lahore he said the tax is not yet applicable as the state bank didn’t get the approval. Once it gets approved them it will start implementing on every transaction.
If i buy a plot and construct a house on it and then sell it. How my gain tax will be calculated.
@Asad, as you mentioned you were worried on seeing the notice, this stress and tension will slow investment. Not all TOs are polite, and not everyone understands how they work. What if they had refused to accept your documents or had put some absurd objection? Where will an ordinar person go? Courts don't promptly clear property cases.
It seems following impacts of this law are most likely :
Total money on taxes on transactions will increase, but not too much. It will have impact on small investors and day traders though who will get more hit on high volume transactions that is their bread and butter. Big black fish will be ok, their net margins are high to absorb these taxes for now, as they exit the property business.
When a seller will sell property, if it was bought with black money, or the property was under declared on paper, for sure FBR will track the scent of such deals and pursue the seller for a fat tax cut, or bribe.
For buyer, it will not be possible to park black money in property, and many buyers will want to put the market price of property in deals now, least they get into trouble when selling, or have to prove their source of income.
End result, mafia will exit property business or will have government officials in their back pockets as they always do. FBR will only harass small and medium buyers for taxes or bribes. "Dream" of ordinary people to build houses will still not be realised, because FBR will want their cut, and societies will not develop without investors, so what genuine buyer will want to buy somewhere with no infrastructure? The real headache will be dealing with FBR notices, and harassment . Of course big players will find the way out as they do in ever other sector of Pakistan. It's the small guy or many overseas Pakistanis who have no clue how systems work, they will suffer the most when they start receiving a volley of tax notices.
And mind you no body knows if this law will be implemented in full or not. But FBR must be feeling very keen to utilise their new source of income on a manageable scale, to milk the cow as quickly as possible especially from helpless small buyers and overseas Pakistanis.
So net net, who benefits : corrupt government officials who want their share. Who looses : small investors, dealers, white collar overseas Pakistanis. Who is not impacted : mafias, criminals, black money holders, or people who have "connections"
Would b great if some expert can answer
is there any annual tax introduced in new law on parked plots.
Dear Asid,
Many thanks for this information.It's good for overseas.
How overseas become filer?what documents need to submit?
Please explain in detail so overseas can more understand.
Regards
Ahmed there was no property tax on vacant plots, but Punjab govt has recently proposed tax in this budget. This will be applicable on vacant plots after 2 years of possession. How will they implement, is still a question.
Overseas Pakistanis can file their tax returns themselves by logging into e.fbr.gov.pk website.
Or they can hire any consultant and pay a nominal fee (ranges between Rs.5,000 to 10,000) for the full service including obtaining NTN no., filing tax return and wealth statement. The consultant can also advise you on how to properly document your foreign income.
The last date for filing tax return is 30th September, but it is good time to apply for NTN now.
Thx Isloo1