Pakistan Proposes Major Property Tax Cuts in FY2026-27 Budget to Boost Real Estate Sector

ISLAMABAD:** The federal government has prepared proposals to significantly reduce taxes on the purchase and sale of property in the upcoming 2026-27 federal budget as part of efforts to stimulate Pakistan’s real estate and construction sectors.

According to sources, the government is considering lowering the tax rate on the purchase of immovable property for tax filers from 1.5 percent to 0.25 percent. Similarly, the tax on the sale of immovable property is proposed to be reduced from 4.5 percent to 1.5 percent.

The proposed tax relief measures are currently under discussion with the International Monetary Fund. However, the IMF is reportedly opposing the suggested reductions, expressing concerns over their potential impact on government revenues.

Government officials argue that lowering property transaction taxes would revive activity in the real estate market, encourage investment, and increase overall economic activity. They maintain that greater market participation could ultimately lead to higher tax collections despite the lower rates.

The government also expects the proposed measures to support the construction industry, attract new investment, and create employment opportunities across related sectors.

The final decision on the tax proposals is expected to be announced as part of the federal budget for the 2026-27 fiscal year.