Real Estate Market Revives as FBR Grants Tax Relief to Overseas Pakistanis

The Federal Board of Revenue (FBR) introduced a major update in 2024 related to Pakistan’s real estate. This update revolves around property valuation and tax exemptions for overseas Pakistanis. 

Background of the Update

In June 2022, a huge change was announced for overseas Pakistanis. Before this, property transactions in Pakistan had two types of taxes:

1. Section 236-C (Advance tax on the seller).
2. Section 236-K (Advance tax on the buyer).

Both buyers and sellers, including overseas Pakistanis, pay these taxes when dealing in property transactions. Many overseas Pakistanis are upset about paying double taxation. For this reason, many people complain to government departments and demand tax relief. 

New Notification Exemption for Overseas Pakistanis

On November 25, 2024, the Federal Board of Revenue (FBR) issued the notice and relieved overseas Pakistanis. The Revenue Division and Inland Revenue Department were told to remove the 3% tax on buying and selling property for overseas Pakistanis.

This notification was issued under the direction of the Chief Commissioner; implementation is expected soon. The exemption applies only to those overseas Pakistanis who have the NICOP (National Identity Card for Overseas Pakistanis) or a POC (Pakistan Origin Card). 

Impact of the Update Real Estate Market

These changes are expected to help improve Pakistan’s real estate market, which had been stuck. Over the past year and a half, the market has slowed because of high taxes, rising inflation, and less buying power. Many investors were afraid to buy and sell property due to the huge taxes. 

With the removal of the 3% buying and 3% selling tax for overseas Pakistanis, these good results are expected:

1. Increase Property Prices: Areas like DHA, Bahria Town, Lake City, Bahria Orchard, Etihad Town, and Al-Kabir Town in Lahore are likely to see higher property demand, which will make property prices grow.
2. Revival of Investor Interests: Exemption encourages overseas Pakistanis to return to the market. 
3. Better Market Rotation: The rotation of the property market was slow, but there was an increase in buying and selling activity.
4. Construction Industry Boost: The construction sector supports many industries and workers. More demand for construction boosts industries like cement, steel, machinery, and labour.

Past Challenges & Market Trends

In the past two years, Pakistan’s real estate has faced a tough time. Property prices were falling, and investors have been unable to invest in real estate. Big housing societies like DHA, Bahria Town, and Lake City see a big drop in property deals, with prices falling up to 50% in some areas.

Developers were also affected, as the cost of building materials like cement, steel, and machinery went up. These factors create difficulties for developers in offering affordable prices to buyers.

What’s Next for the Real Estate Market

The 2024 circular is expected to change how the market works in 2025. The FBR exemptions for overseas Pakistanis are golden news.

1. Restarting of Paused Project: Many housing projects are on hold and now resume due to market activity. It is beneficial for developers, end users, and investors.
2. Increased Project Prices: As demand from overseas Pakistanis grows, prices in top areas like DHA, Bahria Town, and Lake City are likely to increase. 
3. Opportunities for Investors: Investors have a great opportunity to purchase properties at low prices.
4. Positive Impact on the Economy: Real estate is the industry’s key to supporting construction, employment, and other sectors. Real estate boosts the economy and automatically improves.

Conclusion

The FBR decided to remove some property taxes for overseas Pakistanis. It solves their issues and helps the real estate market grow. As 2025 nears, demand for property, especially in areas like DHA, Bahria Town, and Lake City, is expected to increase. This is a great opportunity for investors to act before the price increases.

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