FBR Announces Major Relief for Property Sector, Leading to Faster Property Transactions

The Federal Board of Revenue (FBR) has announced a major relief for the property sector, which is expected to speed up property transactions by reducing the property valuation for constructed homes. According to an FBR notification, a difference has been reintroduced in the valuation of new and old bungalows and flats.

Johar Iqbal, President of the Defence and Clifton Association of Real Estate (DEFCLAREA), stated that the relief offered by FBR would benefit ordinary citizens, especially those looking to purchase old or new homes. He further explained that FBR had made significant improvements through the recent amendments. Previously, the same tax was applied to both new and old homes, which discouraged people from purchasing older properties. However, with DEFCLAREA’s recommendations, this issue has now been rectified.

Iqbal elaborated that property prices vary by location, and now, for properties that are 25 years old or more, tax would only apply to the land and not the entire structure. This change will benefit those in Karachi, as buyers of older properties will now only pay tax on the land, not on the construction itself.

Under the new system, the tax on properties bought in the 5-10 year range will be 5%, properties between 10-15 years old will be taxed at 7.5%, and properties aged 15-25 years will see a 30% reduction in value. This new formula is effective immediately.

Iqbal further explained that before the revision, property valuations had risen so much that it had become difficult for buyers to transfer properties under their name. This change is expected to make the process easier, generating more revenue for FBR and providing relief to citizens.

He added that the reforms primarily apply to Sindh, particularly Karachi, as the issue started there and required urgent attention.

Iqbal also mentioned that FBR had been urged not to differentiate between filers and non-filers in property matters. He argued that if a person is purchasing property and providing all necessary information, they should be considered a filer. However, if they do not file returns the following year, other measures could be taken to collect taxes, without unnecessarily harassing the buyers.