The federal Budget for the fiscal year 2018-19, announced last month, came into effect on July 1. As has the case previously, this year’s budget has several implications for the stakeholders of the real estate sector-be they real estate agents, buyers or sellers-as well as the Federal Board of Revenue (FBR).
The Collector Rate (the value of immovable property) continues to be determined by the FBR evaluation table. Usually 10 to 50% higher than the actual market value of the property, the collector rate affects theapplicable taxes on all property transactions, which are as follows. With the same as the last fiscal year.
1. Advance Tax was applicable on properties priced at million rupees and above; two percent was applicable for income tax filers, while non-filers paid four percent. This year, the slab has changed from four to five million rupees and above.
More importantly, while filers will continue to be taxed at two percent, non-filers can no longer purchase properties priced at and above the new slab. Until now, non-filers could purchase property of any value as they paid an advance Tax of four percent. The aim of this restriction is to increase the FBR tax base and encourage more people to file their taxes.
2. Capital Value Gain Tax (CGT) is paid by the seller and applicable on properties sold within three years and amounts to one percent for income tax filers and two percent for non-filers.
3. Capital Value Tax (CVT) is paid by the buyer at the time of purchasing the property and amounts to 2 to 2.5% of the value of property.
4. Stamp Duty is paid by the buyer on all transfer documents and amounts to two percent of the value of property.
5. Registration fees are paid by the buyer for the registration of ownership documents and amounts to one percent of the value of property.
By Uzma Khateeb Nawaz. Information provided by CITI Associates, Karachi.