New rule and taxes in property inviting slump after july 1st.
Dc rate direct current in west or deputy commissionaire rate in pakistan not valid from july 1st . Sbp valuer now will evaluate property individually instead of general and put taxes accordingly, ,already heavy taxes for fillers and non filler implemented , very sad , this corrupted govt now major partner in everything you earn without providing anything good in anyone life , gate for slump now opened , who will stop property crises now ?? Instead of implementing agriculture tax and amendment in law , instead of developing univ and hospital in rural areas instead of banning construction of c class societies on agriculture land , and stopping people moving to cities , instead of saving agriculture land for agriculture these short cut lovers corrupted , dishonest,sluggish money launderers , feudal lords in govt come up with more short cut ways to target hard working people . Very sad indeed . Welcome slump and correction .
Can you explain in laymen terms what these new taxes are and how they will work? Every year after budget i hear same thing that property market will crash.
Asad sb,
Give it a little time, things will be clear and I hope it will not be that horrible as you had painted above. Indeed it will have negative impact on the market but not complete destruction. Things will come to normal with passage of time.
Regards
Biggest question is why we will pay so heavy taxes to corrupt govt? , who gonna trust them that this money from taxes will be fruitful . Instead actually these money will go to IMF and ARMY , no more harsh taxes on middle class . Shame on govt
The new tax regime is going to make things uncertain for a while. The market might stagnate for a month or two before the implementation of the new law is clarified to land authorities, dealers, property owners, investors and potential buyers. The implementation is easier said than done - involving state bank and external evaluators is simply going to complicate matters. The market value is usually determined by plot prices being demanded and supplied, which indicates that the new DC value will be high and so will be the tax, people who have bought the land on high prices will not offer a cheaper price, will they? Secondly the evaluators hold a position that they can very easily misuse. What if the buyer and seller are in agreement to show a less buying/selling price? these and similar scenarios will determine the fate of the market.
On a separate front, if we analyse the flow of investment. Land has always prevailed as a good investment in Pakistan, thanks to the political and economical mess ups and their affects of industry and stock market. I don't see this regime encouraging the flow of money towards the crippling industry. This might encourage people to take their money out via 'hundi'. The property market is definitely at a crossroad!
Todays Jangnewspaper news really affect the property prices
http://e.jang.com.pk/07-01-2016/lahore/pic.asp?picname=1631.gif
Ahmed …Sir its easier said than done…
Saadi sb no doubt its not easier to implement but if they r succeeded to implement it then it would have a huge effect on property prices and it seems gov have strict instruction to collect taxes from foreign donors and this way they can collect huge taxes from property and can also change the direction of investment from property to industry which is much required in the current scenario.
@ahmed sb…Sir which industry?Is there any industry left in Pakistan? Seems highly unlikely plus it can stagnate the prices because people are not willing to sell their properties at lower prices…Prices won’t come down in my opinion.
Non filer need to pay taxes for last ten years of transactions and filers will pay for transaction done in last five years…
Sir filers will have to pay nothing since their transactions are already recorded and they got this money through legal means…
Don’t worry people, I stopped reading the article in the first paragraph. It is an IMPOSSIBLE TASK
Agreed with Junaid sb, Nothing will happen due to this new Law however the rumors which floated on social media from some of our emotional real estate dealers may effect the property prices otherwise there is no reason of decrease in prices or any slump.
Regards,
KJ
I see two extreme opinions being expressed here, but in my view the truth lies somewhere in the middle. Without getting into the pros & cons of this tax measure (may be later), I will like to state the following.
The volume of property transactions is so huge that it is practically impossible for the incompetent tax machinery to cover all of them, specially given the manual or disaggregated recording of transfers. Even if they wanted to, getting millions of properties verified based on market value within the limited timeframe available with tax authorities is next to impossible.
As a result, they will adopt the same approach they use for selecting cases for audit i.e. Sampling based on "risk". In this case, high risk transactions will be those taking place in societies popular with big investors and property flippers. So while lesser known projects might not see much impact, the more popular brands e.g. Bahria, DHA etc. Will almost certainly be on the radar of tax hounds.
So now the value of the One crore plot will be One crore or more or less?Can someone explain…
@Matrix. If the plot is located in a project known for lots of speculative investment through flipping & dealer activity, its price will likely adjust downward due to exodus of short term investors. If its in a project with many houses already built and more coming up, the price will likely remain stable due to demand from genuine buyers. However, if it is located in a project seeing lots of new infrastructure development, the price will almost certainly gain due to investor demand.
Raza thanks for speculating the future prices, but my question was about what will the adjustment in the market value of the Properties…
DC value of dha 1 is revised at 63 lacs and for dha 2 it is yet to be fixed but is expected to be somewhere close to 5 milion±…For dha 2 it was 25 lacs earlier so nothing to worry about…Hungama zada hai or masla kamm hai…
Asad do you remember when IK got carried away and announced civil disobedience movement not to pay bills and taxes. Then we found out that the businesses of his own colleagues were paying tax - no one wants to default and pay fines. The electricity bill of his own house in Zaman Park Lahore was paid up.
In principle this is not a valid basis not to pay taxes. If we do not agree with a particular tax or if we think the Government is corrupt, we should protest but still pay taxes. After all the salaried class is paying its tax on salary income.