WEBDESK: The federal government is preparing to offer major tax relief for Pakistan’s real estate sector in the upcoming Budget 2025-26. New proposals aim to reduce transaction costs, simplify property deals, and attract more investment from both local buyers and overseas Pakistanis.
Budget 2025-26: Lower Property Transaction Taxes
One of the biggest highlights of Budget 2025-26 is a significant reduction in property transaction taxes. Currently, combined taxes on property purchases and sales can reach up to 11%, but this is expected to be cut down to around 2–2.5 per cent.
On property sales specifically, possible tax rates will be between 1.5 and 2 per cent. Because of this change, there will be a rise in formal and legally documented property transfers across the country.
Budget 2025-26: Relief for Overseas Pakistanis and Builders
Another major relief under Budget 2025-26 is the planned removal of Federal Excise Duty (FED) on immovable property transactions, especially for overseas Pakistanis. Builders and developers are also likely to benefit as the government considers reducing or abolishing withholding taxes on construction materials and property transfers.
Budget 2025-26: Incentives for First-Time Buyers and Tax Filers
Budget 2025-26 aims to help people become property owners by proposing a reduction in advance tax for those who pay taxes from 3per cent to 0.5per cent. Discussions have begun to draft exemptions on buying property within certain ranges for first-time home buyers.
It is expected that the Capital Gains Tax (CGT) for property sales will change in Budget 2024 to match current inflation and market trends, giving more benefits to property sellers. Some officials are trying to eliminate Section 7E, requiring taxation on deemed rental income for properties that are empty.
NADRA Verification and Real Estate Regulation
Property investors living abroad will soon have a simpler way to purchase properties in Pakistan through NADRA’s online verification. The authorities are considering restarting the Pakistan Real Estate Regulatory Authority (PRERA) to manage property trades and ensure buyers are safe during the transactions.
These major real estate reforms under Budget 2025-26 are set to take effect from July 1, 2025, following formal approval in the National Assembly.
