I have talked to different agents from major cities across Pakistan and have received similar feedback on the valuation tables issued by the Federal Board of Revenue for taxation purposes. These agents are of the view that no universal rule can be applied to estimate the value of property even in the same locality, let alone prepare a rate list of property throughout the country.
The FBR valuation tables have left many genuine buyers, authentic investors and even sellers so confused that property transaction volume has seen a major drop throughout the country. Please note that, as directed by the FBR, the Advance Tax and Capital Gains Tax on property transactions carried out after July 01, 2016 will be calculated per the FBR rates given in the valuation tables and not on the Deputy Collector’s rate.
So naturally, it is only logical to demand that these rates be made more realistic. Well, I have good news for you; the government is actually looking to revise valuation tables by bringing them down, at least in the DHA developments initially. According to a news source, the government may reduce the valuation table rates of property in DHA by one third as, reportedly, DHA authorities complained that property valuation rates for DHA were much higher than the rates quoted for Bahria Town. The authority raised these concerns before the Finance Minister Ishaq Dar who asked the FBR to address this issue, according to the news source.
However, it is not clear if the rates will be fixed now or after the next budget. Please note that property rates quoted in valuation tables for properties in Peshawar and different cities of Sindh have also received similar criticism but no intention of fixing these rates has been expressed by the authorities concerned. Furthermore, the announcement of an amnesty scheme for the property sector is also expected, the expected terms and details of which will be shared in my next article.
Meanwhile, I would like to get your take on the expected correction in the FBR valuation tables for DHA so don’t forget to comment below.
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I think current tax rates recommended by FBR in DHA are very low and should be increased instead of decreasing it. I believe it is good for price correction. Prices were going out of hand. Up to 400 % increase in DHA Phase 8 in last 3 years have been seen.
I would commend the excellent step by FBR that have blown the bubble in middle and has saved genuine buyers from getting stung.
Dear Riaz
yes this was a good initiative by the govt but after pressure from property mafia the govt is kneeling down which is not good for genuine buyers…..the amnesty will give a chance to black money holders to GET OUT OF THE PROPERTY MARKET BY GIVING LOW TAXES….THIS IS A WAY OUT FOR THEM AND THIS MIGHT MEAN FURTHER DECLINE IN PROPERTY PRICES
Dear Riaz
Its actually even more dangerous that FBR has increased the property taxes. Right now the property market is low but it will recover in the long run after few years. That time sellers will demand so abnormally that the middle class people even would not be able to dream of a home.The situation will get even more worst and the price rise will touch the 7th sky if the situation persists.
A limited community will hold the property in its hands and then would sell at the own demanded rates. Short sellers will get finish from the market and only long term seller/investors will enjoy the market.The whole property market would behave like a puppet in the hands of long term seller or investors.
It’s Govt good move to impose the taxes, property prices are quite and it’s not reachable to common man.
All the comments here are about black money, tax, FBR.
What about the people who has invested in properties with hardly earned money.
and the genuine buyers those who has bought at higher price and now the value of their property
will fall
DEAR KASHIF BHAI
GENUINE BUYERS ARE PPL WHO BUY PROPERTY TO BUILD A HOME AND NOT FOR TRADING…PROPERTY IS FOR LIVING AND NOT TO BE USED AS A TRADING COMMODITY AS IT IS A BASIC NECCASITY OF A HUMAN…THEREFORE SORRY TO SAY BUT PROPERTY PRICES NEED TO CRASH AS IT WAS A BUBBLE DUE TO WHICH MANY PPL COULD NOT BUY HOMES FOR LIVING
The entire world uses property as investment. Someone (investor/builder) has to build the house for the genuine buyer to buy them. With these tax rates the builder won’t be building houses. Where then would these genuine buyers get a house to buy anyway.
http:// www. brecorder. com/pakistan/industries-a-sectors/taxation/181:pakistan/91225:real-estate-transactions-fbr-empowered-to-seek-explanation-from-buyers-sellers/?date=2016-10-06
FOR EVERYONES INFO
Dear Kashif, As iterated by many Property Experts that 90% of money rotating in investment is either black money or unaccounted money (which has never been declared in FBR Wealth Statement). It is necessary to stop all those who are evading taxes, speculating real state prices and inflating a bubble. I back Government & FBR to hold a strong stance against these elites who have never given their share of taxes. If they decrease taxes now, this 90% mafia will transfer their load on genuine buyers. Secondly, market has grown unnaturally and requires significant correction. up to 400% prices increase in last 3 years have been seen. this is incomprehensible for logical minds. prices must grow organically and investors should be thoroughly checked for source of income.
Mr. Riaz,
I have already mentioned in my comment that my concern is neither the black money nor the tax revenues. For your kind information i am concerned about the investors those who has invested their hardly earned money/savings.
Does it mean that to regulate black money at the cost of the rest 10% white money investors? And for your information price settled itself in a market economy based on demand and supply forces, govt. is not supposed to effect the market.
Not keeping check on black money from decades this mafia is strong enough now to escape this time as well… Most of the black money belongs to politicians and bureaucrats and if someone think that this type of regulations will help then one has to wake up.
Now about the market and price..
Price is solely based on demand and supply.. Even though shift of black money will effect but not that much.. think about the last price crash it was not by any means cause of black money shift, tax or something like this.. Even people were having black money more than now…. Population of Pk is increasing at an alarming rate so the need of housing… Property prices in big cities in coming years will be skyrocketing..
Another factor is consumer behavior… ppl think property a safe investment and purchasing behavior stronger than selling ppl buy property and leave for their kids but do not sell…
So many factors to consider not just black money and taxes… We as a nation can buy a car with 400% tax then i do not think that this 10% or something like this rate will frame a new consumer behavior….
Again yes shift of black money will effect but not that much…
Well done Kashif.
You have analyzed very well.Its the responsibility of Govt to capture and punish the black money makers rather than taking
the steps to ruin the hardly earned money of the white money makers.If Govt is so interested to remove black money makers then why not to start the Audit from Politicians, Army & bureaucrats.
These taxes has been increased to just to grab the money the people, put inside the pockets and then escape away. This is all rubbish.
I totally agree with your comments.
Thanks. Muhammad Zeeshan
Dear
You are backing a Govt which itself is a big mafia & includes big big big robbers.
The matter is not of black or white money the matter is that how can economy of Pakistan prosper. Friends sometimes black money can also boom the economy, how let me tell you, I suggest fixed taxes are imposed like GST and I think CGT or any other tax should be relinquished as they are confusing and fixed taxes should be imposed regardless for how much you sell for. There will be more transactions and more revenue. There is no definition of genuine or non genuine buyer who ever is giving money is genuine in business terms.
Pakistani people are not use to of giving taxes things should be imposed gradually. People give taxes in western countries because they know that they will get a lot of benefits in return but unfortunately our system is so corrupt that they should not expect white or black stuff from people.
The matter is that real estate business is giving so many jobs to people starting from real estate agents to builders and all will be lost. The government should let the people make money so at least the money will circulate and provide jobs to the people. Please tell me what other options do we have to invest.
If we see government is already increasing taxes in every budget. the problem is not due to taxes but due to confusion of implementing these taxes.
Policies made in Pakistan are so erratic which are beyond imagination. If Ishaq Dar Finance Minister of Pakistan has made all the investment in Dubai how one can expect to collect tax from.
Recently Chief Justice Mr Anwar Zaheer gave realistic remarks that government is being run like a kingdom and many such adverse remarks were given.
Nawaz Sharif and Shahbaz Sharif Zardari and other politicians involved in plundering Pakistan wealth must be severely punished
Panama Leaks clearly show the politicians in looting Pakistan but who cares.
I am witnessing here in UAE huge development in real estate sector where infrastructure is completed and new projects are coming up at fast pace. Dubai south is going to be an extraordinary expansion of HH Sheikh Mohammad vision new Al Maktoum Airport Dubai is functional now and with very low tax system Dubai will fetch further unprecedented investment from Pakistan and Indian Besides remarkable development Dubai offers top class law and order situation certainity and security which do not exist in Pakistan.
The FBR and other Cheaters are making such rules under the pressure of International financial agencies which will devastating as these persons will shift to UAE UK PANAMA or any other country leaving Pakistan under huge debts.
Completely agreed with Masood Abbas
I am overseas Pakistani among those who invested may be not to build house but invested for somehow mid to long term. people already moving towards Canada, UAE, UK etc.
the investor will always transfer the load to buyers. You actually expect investors to take a hit on their investment?
Dear All,
I believe that our Government is trying to establish a culture where people are forced to pay Taxes but at the same time if you would take the trouble of viewing the developments of those countries who have already implemented theses taxation policies than you would be amazed.
The money which these countries are accumulating by way of Taxes and than spending on Education, Medical, infra structure and many other things which are beneficial to the local citizens is above excellence.
Very sorry to mention here that Pakistan Government is only trying to squeeze out money from law abiding common people and spending on their luxurious way of governance.
We all are paying for Diplomats Traveling expenses, their families holidays, medical bills and many other things and even security for them whereas common person does not have any such facilities in Pakistan,
Ishaq Dar got a reward for implementing new Taxes in the Country but did anyone bothered to ask him that why there is so much poverty in the Country, why people are killing each other for basic needs, how many children are doing child labor, why there are so many prostitution dens running in Pakistan.
There are so many questions so its better to keep our mouth shut and do not encourage our elected Government to screw up more because already they have done a lot to destabilize the system by their poor governance.
My dear brothers,
I believe there is no use of discussing the impact of the moves made by the influential elite of this country, whether it’s the people like Ishaq Dar ( in the present scenario), Shaukat Aziz (a few years ago- I hope you remember the stock market boom and then its historic crash in 2005) or Zardari regime, or the ex-Chief justice restoration movement. Unfortunately, in our dear homeland, only individuals matter – policies change with the change of individuals at the helm of affairs. This shows there is no institution building, no long term policies.
So please, don’t invest in a place where there is so much uncertainty. And most importantly, there is no use of such discussions when it matters the least what your views are. The thing that really matters is what a few most influential people’s interests are at a particular point in time.
If you have interest in English literature, please read a famous poem ” Patriot into Traitor”. This is what has been happening in Pakistan over the last decades of our national history.
Flee from here with your money if you can BECAUSE this is the country only for the ELITE,
Dear Shehzad,
I believe you have shown a true picture of our dear country.
I think there are lot of educated people in Pakistan who think in a similar manner as you do and your advise to all Pakistani’s is simply great.
It is unfair to have same value for newly constructed & that 30 years ago.Is brand new garment & old one has same value Particularly not for investment purpose but too costly for residence. We got a flat in inheritance in which our family living since past 25 years & condition is worse,but as we have no other residence we are still living. Bur an 100% rise in value & exorbitant tax rate is annoying us. There should be slabs according to time period.As like different rate on sale after 1 to 3 years. Properties older than 20 years should be exempted.
Any one can guide me, either property prices increase or decrease in near future in karachi. Out of the range to buy flat and home for common people
Any one can guide me about the property prices in Karachi. Either property prices increased or decreased in near future. Out of the range flat and home to buy for common people.
Any one can guide me about the property prices in Karachi. Either property prices increased or decreased in near future. Out of the range flat and home to buy for common people.