My Plot transfer date is 27th July 2016. My agent told me that i don’t need to pay sellers tax because its not yet implemented. Is he lying?
Once again i would like to remind All the investors and property owners,
The real estate market is totally STABLE.
Do not panic under the current circumstances, HOLD your properties for ATLEAST 2-3 months and do not offer your property for sale in the market until extremely necessary.
Even in that case, DO NOT give it away below the current market price.
80% of the things regarding evaluation of property are NOT clear yet, so the RUMOURS of slump by the SELFISH, OPPORTUNIST people are TOTALLY FALSE. So DO NOT panic, relax and HOLD your properties.
@ Fahad....why are you so over optimistic ? can you give us some solid reasons behind your optimism?
I agree waiting for 2-6 months is the only option for clarity.
BCZ, now a days ,everything is so unpredictable, and you are so positively predicting something, against what the arrows are already out of bow, and only time factor is the gap .
....
|"""enjoy the music of this report.""""
''''DAWN NEWS"""9 JULY 2016''
KARACHI: The federal budget 2016-17 and an amendment to the Income Tax Ordinance 2001 have begun to impact the real estate sector.
Pakistan’s real estate market has witnessed bullish trend for last four years and a drastic price hike in the last one year. Estate agents believe that after the budget announcement 2016-17 and the amendment, the scenario has changed and the market is cooling down.
An important amendment was made to Section 68 of the Income Tax Ordinance 2001 through the Finance Act 2016, effective from July 1, 2016. Under the amendment, the provincial governments are no longer relevant as all properties would be evaluated through the valuers of the State Bank of Pakistan (SBP).
One or more valuers of the SBP would fix the market value of immovable property and refer it to FBR’s in-land revenue department.
President DHA and Clifton Association of Real Estate Agents, Raja Mazhar claimed a dip of 10-20 percent in property prices in posh areas of the city following the announcement.
He said the amendment in the income tax ordinance would discourage investment in real estate as the sector may lose attraction for overseas Pakistanis. He warned that it might eventually depress the inflow of remittances in the country.
Mr Raja said many buyers and sellers who had taken advance token for the property deal in June are now in two minds. The reports of dishonouring of cheques in banks are adding to their tension. Besides, buyers and sellers trying to strike a deal after Eid are also shaken.
He said the government should raise official value of the property only where it is necessary. The measures would not help the government in achieving its revenue targets in view of declining deals in future, he claimed.
Vice Chairman FPCCI Standing Committee on Real Estate Research and Image Building, Muhammad Shafi Jakvani said since 1986, all property transactions were being evaluated according to provincial government’s valuation table. He acknowledged that property was under priced by two to 25pc.
Due to this huge difference between market and documented value, the government was bearing huge losses in revenue.
Mr Jakvani said the Collector rate provided by provincial governments will not be valid now. It will increase the transaction cost but remove a major anomaly.
He said the amendment would discourage black money from entering the sector and will open the doors to foreign direct investment (FDI) in this sector.
However, this arrangement will not work because of the huge difference between the documented values of properties and real market prices, he warned.
He went to add: “It will bring down real estate prices in the market for the initial period of this amendment and in the long run will benefit the government and investors.”
CGT calculation revision
Besides the amendment, the Capital Gains Tax (CGT) calculation has also been revised.
The CGT was re-introduced after 26 years in the 2013-14 budget and then rescheduled in 2014-15 budget. Now, the tax percentage and time frame both have been revised.
Previously, CGT was applicable on property sold within 1 and 2 years time at a rate of 10pc and 5pc accordingly. Now the time frame has been increased to five years and 10pc CGT will be applicable. At the time of transaction it will be payable at the rate of one per cent for filer and two per cent for non-filer, revised from 0.5pc and one per cent accordingly.
Advance tax was already imposed in the last budget which will be applicable on the property above Rs 3 million. Now the percentage has been changed to two per cent for filer and four per cent for non-filer from one per cent for filer and 2pc for non-filer.
Previously, as per collector valuation table, most property prices were calculated and documented price at lower than Rs3m but after this amendment, property prices will be assumed on real market value and most of the properties will be above the ‘three million slab’.
After the federal budget, there is the provincial budget in which Collector values have been provided. This time, the given values have been revised and increased by 20pc.
In Sindh budget, stamp duty charges have been revised and increased by 50pc too.
Advance tax has also been revised and will be paid by the seller. It is 2pc of the Collector Rate applicable on property value of Rs3 million and above for the filer, and 4pc for non-filer, from 1pc for filer and 2pc for non-filer.
Stamp duty has also been revised and increased by 50pc which will be paid by the buyer on transfer documents; it was 2pc of the Collector Rate of any property. Now it has been increased by 50pc.
Registration fee paid by the buyer for the registration of documents in registrar office is applicable at one per cent of the official value declared by the collector value table.
Published in Dawn, July 9th, 2016
Article on zameen.com: "New taxes – a nightmare for overseas Pakistanis or die-hard local investors?"
Main points are as below:
For the sale of a 1 kanal residential plot in DHA Lahore from Phase I to VIII, which was bought and registered in the last 5 years, with its current average market value of PKR 20 million, seller will be paying Capital Gain Tax as below:
CGT = 10% of Market Value of Plot (MVP) – Declared Value of plot (DVP) at the time of purchase
DVP (in last 5 years) = DC Rate Value at the time of purchase = approx 7 million/kanal (average DC Rate for DHA Lahore residential plots in Phase I, II, III, IV and V in the last 5 years)
So CGT = 10% of MVP (PKR 20 million) – DVP (PKR 7 million) = PKR 1.3 million
Also, remember that 1% and 2% Adjustable Advance Tax will be applicable on filers and non-filers respectively. For filers, it will be adjusted in terms of claiming credit when they file annual tax returns but for non-filers, it will be an additional cost of PKR 400,000 in the stated case. If Transfer Fees, CVT and Stamp Duty are added strictly as per the law, a minimum of PKR 2 million would be paid from July 1, 2016 onwards on the sale of every 1 kanal residential plot in DHA Phase I-VIII.
In view of the above discussion, a downward correction or a breather thereafter in the prices of the overall real estate in the country is eminent. However, the major impact of all these changes will be observed on the black-money holders and their strategy to park their untaxed money in high-tagged assets that enable them to launder the black money.
I think people who could manage to sale their plots in the couple of months would get the benefit of doubt but later when every one knows the situation then not only prices would go down but also it would be difficult to sale property. Many people think that people who have invested money from abroad all have white money but those who have lived in europ (i just know about the western countries) knows that with white money one can hardly manage once living in europ most of the people who have invested huge money from europ is not white money its not possible to earn huge money in europ bcz high taxes if one earn huge he have to pay heavy taxes they are most of the people who have business and with different ways hide money and send that money through different illegal means to pk. (hundi or by had)
@ Hamid Ali
Sir theres nothing to worry about for you.
Even if you were a tax filer and you sale it now for 1crore + , u have to pay 0% CGT , as you bought it more than 5 years ago.
As u have said u received FOREIGN REMITTANCES in your bank through proper channel, ask your bank manager to get you FOREIGN REMITTANCE CERTIFICATES for each of the transaction till date so that you have a proof of your source of income which is EXEMPTED from tax.
Issuance of the foreign remmitance certificates from banks can take from days to weeks depending upon transaction type and your bank, so i advise you to get them issued regularly whenever a remittance is received plus the keep a complete updated record.
If u still get your earnings through foreign remmitance, i would advise you to become a TAX FILER as you will have to pay ZERO TAX whilst you can enjoy the benefits of a filer like annual tax on cars, banking transactions, advance tax and many more..
Hmmmm
Govt & it's minions say "Implication of new taxes will reduce speculation & satta & make it easy for lay-common to buy and build house".
A silly argument :) No?
Middle class can only buy new housing units when they have enough savings from their businesses,when their are new opportunities, when the SME is flourishing,When the economy is carpeted by new-investment avenues. We have all these? No...but a diminishing return.
Trying to increase the buying power of common-man by imposing heavy taxes on a industry that is 2nd or 3rd big contributor in GDP of country is a pipe-dream.
Ishaq Dar is meeting with delegates of property dealers on Monday to discuss their concerns over new tax measures that has hit the property market hard.
According to the above blog we can say,
"Sonnay pe suhaga" jo kal ki matti aaj Sonna honna thi wo aj swaah (rakh) ho gai, lakin black money walon k liye ya jis k pass proofs nahi.
Govt is considering one time amnesty for black money invested in property market. If this is materialized, it will surely boost the property market.
Dear brothers please it,
https://www.thenews.com.pk/print/134337-Real-estate-businesses-struggle-on-SBPs-new-valuation-rules
Regards
The real question which needs to be answered here is what is the government’s real intention behind the latest taxation measures. If it is to raise taxes and document the economy, they will definitely show some flexibility and let the market breath its way back to life. On the other hand, if the intention is to “control speculative price gains and reduce land prices” as is being officially stated by many government officials including Mr Dar himself, then the government will not budge too much from its stance. We should find out within a week or so.
Raza, govt is not interested in regulating the price. They want to collect more taxes and also bring the black money, parked in non-productive real estate sector, into industry.
To become file as oversea you an active sim on your NIC. Go FBR website and follow registration process which will be complete only if you input code you received on email and mobile with active sim on your NIC.
Once this done after login declare your assets and submit return with residence status non-resident.After few hours your return will be accpet and notificaion appear in your fbr account. After 2 week your NIC will appear in active Tax payer list
PropertyInfo, thx bro. My advise to all overseas bros and sis, plz file your tax returns online and enjoy peace of mind.this will save you lot of money that is otherwise wasted as penalty on non-filers.
New tax measures create uncertainty in property market.
Regards
Frankly speaking , it will be a disastrous experiment ,to dig the past ,say 5 or 10 year property transaction and hence send notices etc to all the buyers.You will simply enter in a web of intricacy/a bizarre morass,and a total failure.
The overseas Pakistanis residing in west and middle east ,who sends 15-20 billion dollars a year , and on what our import/export gap is filled in and the country runs its daily affairs on that money ,will definitely think 100 times before sending money to PAKISTAN?
.......WHY?????BCZ...
1= was it my fault ,that the DC RATES were kept low?
2= overseas pays taxes abroad on their income and now this new system of 5/10 years digging in ,in past causing a headache for them why??/
3=How could overseas Pakistani small/medium investors be informed of the notices against them?????? or you will put them in jail on arrival in Pakistan?? A TOTAL IMMATURE APPROACH......
.......SOLUTION.....GOV HAS DATA OF MAJORITY/ALL OVERSEAS IN THEIR OVERSEAS MINISTRY. SO why not do it yourself ,rather than confusing the overseas...
4=Just catch the crooks under your own eyes dinning with you on daily basis , and sucking the blood of common people and evading taxes of all sorts.
5= Again who will pay 15-20 lakh tax on a plot for ones own residential purpose, when the money is halal and hard earned?......YES IF its all justice based society , only then one will pay 20 lakh tax on a plot of 1 KANAL ........
BUT......HERE WE KNOW VERY WELL, THAT the billionaires / with billions and billions of rps/dollars , having enormous PALACES OF HUNDREDS OF KANALS.....AND WHAT NOT .....BUT ONLY PAYS FEW THOUSANDS RPS TAXES A YEARS , and the irony is , that the same class of crooks demand such taxes on property transactions........AT LEAST TRY TO HAVE SOME????????////.....
ITS a failed scheme........this is for sure .....yes some taxes will increase but not to the extant of wishes of the crook...for that ,they need to pay first, their own taxes.
MY biggest concern is, "that this confusion will crush the honest investors more" MAY ALLAH save the innocent/halal earners ameen.
Dk, your frustration is not completely unfounded, surely the new measures will have negative effects specially on foreign remittances and investments. Plus declining market will make the white money flee from real estate and construction sectors rendering hundreds of thousand people jobless. Govt should refine the new tax regime to make sure they actually catch the big fishes without hurting the law abiding ones. But I agree that given the track record, the mafia will go free while govt will shoot in its own foot by scaring away white foreign inflows.
As for tightening the rope around tax evaders, this is not for Pakistan alone, this is a global move with US in a lead position. US through its FATCA laws is forcing other countries to provide full bank and property details of US nationals and green card holders to IRS. Imagine, if Pakistan also enters into a bilateral treaty with UAE, UK, Switzerland, Canada and Australia and track all black money of Pakistanis hidden in the world, we will be rich overnight.
On retrospect re-valuation of property, you should not worry too much as that is only for mega deals of crors and billions. I am sure govt will and can not possibly track all tranafers.
More confirmation of a slow down in the property market. This is from today: