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Property market situation after tax amnesty scheme

Property market situation after tax amnesty scheme

Recently government has passed the tax amnesty scheme bill for real estate sector. This bill is passed to ease the realtors’ pressure and also to bring investments back to Pakistan property sector. According to this bill, non-taxpayers can pay 3% tax on property purchase to be tax-payers or to whiten the black money.

Current situation of real estate market after tax amnesty

After tax amnesty scheme, investors are reluctant to invest in property sector. Only genuine buyers and tax-payers are buying affordable / cheap properties. Ghar47 has discussed the matter with different real estate agents / investors about current market situation and according to the information;

Realtors’ views

According to the realtors, investors are not impressed by amnesty scheme as many consider it a big trap. According to realtors, once you are a tax-payer, you are under watch of FBR. People are afraid that FBR or NAB in future will ask the source of income or there can be changes in amnesty policy.

Investors’ views

Investors are very cautious now and will prefer to wait. According to investors, first problem is that if an investor avails amnesty scheme s/he will always remain under watch of FBR and has to fill tax return on annual basis. Secondly, investors in Pakistan are used to earn high returns on property investments in short period, like 20-40% profits on annual basis. But due to high taxes and uncertainty in the property market, now such high profit returns are not visible. Thirdly, investors have many good options to invest their money like STOCKS; 8% rise in stocks since amnesty scheme as approved.

Real estate agents are left with no more options

According to Bahia Town’s Realtor Arif Ali Khan, real estate agents are left with no bullets. They have no desire for more protests. Real estate agencies are closing their businesses on daily basis. More than 30% estate agents have left the property business and are forced to sell their properties and cars to make end meets. According to Arif, if the same situation persists for few more months, only 20% estate agencies will be operating in the market and these agencies will be the large property groups.

Property price trends

At the moment property prices are stagnant, but this situation will not last longer. Within few months we will see either rise or fall in property prices. Property prices in Pakistan are generally dictated by investors who have high buying power; the reason of high property prices in Pakistan. If investors once again start investing in property sector, we will see rise in property prices. But if investors take no interest in real estate sector and only genuine property hunters buy properties, property prices will fall as genuine buyers have low purchasing power.

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(44) Comments

  1. Ali Asghar

    on   said 

    im planning to purchase a house in Bahria town Phase 3 Rawalpindi
    I want to know how much tax i wil have to pay if im not a tax filer
    House owner is demanding around 16.5 million (165 lacs)
    how tax on a house is calculated for buyers?

    Reply
  2. Ali Asghar

    on   said 

    If I buy a house in Bahria Phase 3 Rawalpindi for 16.5 million how Much tax will I have to pay?
    I’m not yet a tax filer

    Reply
    • Ali Asghar
      FBR RATE PER MARLA IN 3.75 LAC
      As a buyer you have to pay Rs. 37,500/- PER MARLA AS REGISTRY FEE OR PURCHASE TAX
      Say if your house size is 10 MARLA YOU HAVE TO PAY 3.75 LAC as registry fee

      Reply
  3. i have booked a 5 rooms flat in gulshan iqbal block 2 of worth 71 lakh and paid 26 lakh now i have to pay them 45 lak more for taking possession of that flat by selling my 2 bed d/d 900 sqft flat in gulshan iqbal block 4 a sb project with lift and i think it worths at least 45 lakh but all agents here are seeing that we need money urjently so thay are offering 40 lakh that is actually the market price of 2 bed lounge 750 sqft apartment here and i have no more money to ad in this and pay there. what should i do? sell in such a low price or resist for my value?

    Reply
  4. Jehanzeb

    on   said 

    I am planning to buy a house in Samanabad, Lahore. If it is a 3 marla newly built house. What should be its approximate market value?

    Reply
  5. muhamamd azeem uddin

    on   said 

    thank you for all people that we have been acknowledge very well. we understood real estate market which help us to buy home

    Reply
  6. mir arif yakub

    on   said 

    just for the information of your valued followers and investors, there are new opportunities to invest in karachi and reap good benefits. one such area is around the airport , malir cantt and accacia golf course, that is the area on and around JINNAH AVENUE.. The area came into limelight when 2/3 years backbahria town karachi and dha city were launched. THe bulk of trafficvisiting these two mega projects relied on Jinnah avenue, as it was the link between shahrah e faisal and super highway.Both bahria town karachi and DHA city are located on either side of the super highway. Jinnah avenue being adjacent to malir cantt and administratively coming under malir cantonment, is the safest area to travel without any street crimes. just another 2 to 3 years and when all these highrises launched on and around jinnah avenue come to completion, a new upscale area would come into existence. Apartments which started from Rs3000 per sq ft are now trading at 8 to 9000 per sq ft.Add to these the urgent development of Accacia golf course, the red line elevated planned on jinnah avenue, the opening of Macdonalds and other international restaurants and fast food outlets, Malik Riazs plans to launch transport linking bahria townetc are all value additions increasing phenomenal rise of prices in this area. Then because of close proximity of karachi airport, the availability of educated and civilised tenants is guaranteed and also like in all modern day cities soon the apartments can be used by corporate sectors as guest accomodation or hotel rooms .

    Reply
  7. YOUSUF LODHI

    on   said 

    AFTER TAX AMNESTY SCHEME – KARACHI PROPERTY
    ============================================

    PROPERTIES that come UNDER CATEGORY 6 OF DC RATE TABLE AND FBR TABLE ARE GETTING GOOD RESPONSE FROM INVESTORS/BUYERS

    PROPERTIES UNDER CATEGORY 3, 4 AND 5 ARE GETTING AVERAGE RESPONSE

    PROPERTIES UNDER CATEGORY 1 & 2 GETTING BELOW AVERAGE RESPONSE

    DHA KARACHI OVERALL SITUATION IS NOT SATISFACTORY. A LARGE NUMBER OF INVESTORS ARE FOUND RUNNING TOWARDS GWADAR

    Reply
    • YOUSUF LODHI
      Many thanks for sharing your on ground information about Karachi real estate sector and property prices.

      Situation is same in Lahore and Islamabad.

      Small size properties and cheap properties less than worth 4 Million PKR are hot cake indeed.
      Market is dominated by just genuine buyers who want a place to live in.
      No major real estate investments at the moment.
      STOCKS @ Record 47,000 first time in PAK history

      GWADAR
      Gwadar real estate has similar storey like Karachi, Lahore and Islamabad.
      Gwadar properties are really affordable.
      5 Marla / 125 SQY plot prices is 5-8 Lac. Definitely we cannot find plots in Karachi, Lahore and Islamabad with same amount.

      AMNESTY SCHEME EFFECTS
      Up till now amnesty scheme has failed to bring investments into real estate sector. Investors are confuse and are in wait and see moment.

      DEVELOPING STORY THAT WILL MAKE RICHES TO RAGS

      Upper house / senate has passed the bill with majority to cancel 5000 PKR NOTE / BILL or to remove from circulation similar to Indian Currency Crisis. Very soon will be passed from parliament / lower house and soon will be law and no more 5000 PKR BILLS / NOTES in the market as we will have short time to change. (SOURCE BOL NEWS)
      Measure are for controlling black money as people have to transfer the notes and government will for once have complete monitory record.

      RESULTS WILL BE SIMILAR TO INDIA REALITY

      India property prices in many areas have crashed by 50% due to currency crisis as high end properties in India are bought with black money. Situation will be very interesting and similar in PAKISTAN.

      Reply
      • YOUSUF LODHI

        on   said 

        500 YARD OPEN PLOT, PHASE 7 EXT. 4-CRORE PLUS
        PHASE 8 NON CONSTRUCTION ZONE: 5 CRORE
        PHASE 8 CONSTRUCTION ZONE: 6 CRORE

        Reply
  8. Dear Friends and Brethren. I am trying to post from last 3 months about the worsening property situation in UAE. I am related to construction and realestate industry.

    Inspite of all UAE government efforts, controlling media, giving huge support to Emaar, Nakheel, Damac, Danube, Al Dar, DP World, Azizi, S&P there is no upward trend in fact in prime areas rates dip to 10-11 percent lower during last 18 months.

    Ishaq Dar and Company property tax tactic didn’t worked even though people transferred huge sums still rates in Dubai going down and down.

    The only reason property not yet crashed is huge parked black money from India, Iran, GCC, Russia , Turkey, Pakistan else it would have been nose dive.

    The realestate gurus have tried each and every trick but due to oil price crash, Euro crash, Russian currency dip, Brexit, Trump selections further damaged situation and now investors have more better options available In UK , Europe and Turkey due to their weaker currency rates.

    You are right investor not allowed to advertise non UAE properties inside and government will control all ads and prior approvals etc.

    That is so typical of these monarchys non democratic governments and real fear for investor as over night they can bend rules and investor damaged too badly.

    Once again dear brethren {other than lack money holders} please please avoid putting your hard earned money in Dubai …Al hamdulliah we have excellent opportunities in the form of DHA Phase 9- DHA Multan- Lake City giving much much better returns without any fears or Qabza very safe and 100% secure investments {stay away from Gawader for atleast 1 year until there appears some pictures as currently it is satta and too much fraud as it is very far and out of control of retail small investers as big fish have their own networks }

    The second thing is it is so easy to sell DHA / Lake city properties unlike small private non branded societies which took months to sell.

    Another great thing is now DHA / Lake city was stagnant for last 5 months and good activity seen now in DHA transfer and Lake city offices as Amnesty scheme is announced and continue as over seas US / CANADA / EUROPE pakis return inn the time of Christmas holidays so now last month to do investment— gather money —sell dead investments and shift to DHA Prism best blocks A, H and J upper cutting and Lake city old bookings and lake city commercials on ground offer real quick gains opportunity.

    Again to repeat brothers I am very much in DUBAI market and please please stay away only purchase if you pay rent over AED 65 K and your salary AED 25K plus then definitely purchase as better to not loose in rent but for investment purpose stay away …too many new laws in line to stop people to sell instantly …more regulations …and artificial means to avoid crash which is inevitable

    Reply
    • Arif
      Yes
      According to many experts DHA City Karachi property is 40-50% down from peak back in May / June 2016.
      But keep in mind that prices many remain stagnant for many months to come.

      Reply
  9. hi,
    i was wondering is it good to buy small land (plot) in lahore garden housing scheme near faizpur interchange? i would really appreciate your reply thank you.

    Reply
  10. rizwan

    on   said 

    DEAR GHAR47

    WHAT IF A PERSON IS ALREADY A TAX FILER AND STILL HAS SOME UNDECLARED INCOME SO HE BUYS A PROPERTY NOW AND DECLARES IT AT DC RATE AND PAYS 3% AND GETS THE MONEY WHITE BW DC RATE AND FBR RATE….SO TAX FILER CAN ALSO TAKE BENEFIT OF THIS 3% TAX AND SINCE HE IS ALREADY A REGISTERED TAX PAYER SO THERE IS NO MORE LIABILITY TO REGISTER???

    PLZ EXPLAIN

    Reply
    • Rizwan
      1- Government is after black money or want to bring undocumented economy to documentation.
      2- Government want to increase tax payers by amnesty schemes

      If Filer has black money it doesn’t matter. What matters is that he has un-taxed money. So even filer has to pay 3% tax for un-taxed money to whiten it. When filer will pay 3% tax on black money his record will be clear and all his money will be declared white.

      Reply
  11. I personally believe we should support the culture of Tax . I am horrified by the state of affairs that people are reluctant to give such minor amount of Taxes to the Government. Although i agree that the corruption with in our country is largely to be blamed as people do not trust the Government any more.

    I believe that in future Government will get more strict to tax evaders, so it is better to embrace it now or later you may actually be paying a very high price . I remember a few years back how Government used to lay off yearly token on vehicles, however those schemes do not come any more similarly smart people will take advantage of these amnesty schemes and whiten all they have , others will keep on waiting and may well pay huge amounts in future.

    Sooner of later we all will be paying taxes , if you want to take advantage , you must do it now.

    Reply
    • Captain
      Fully agree that we should pay taxes
      This amnesty scheme will definitely whiten the black money and government will collect taxes
      BUT A SERIOUS PROBLEM
      Pakistanis are tax evaders and don’t like to be under FBR / NAB watch
      Unfortunately, all amnesty schemes failed in Pakistan and just 1% Pakistanis pay taxes. Things are changing for better and hopefully we will see better days ahead.

      PAKISTAN PROPERTY MARKET IS ALCOHOLIC OF BLACK MONEY

      Unfortunately past property prices / trends show that Pakistan property market is the market of black money. Prices are abnormally high and out of reach of genuine buyers. Without black money prices are crashing or builders / sellers are unable to find buyers.

      Property market is stagnant
      IF investors take interest prices will start rising
      But if only genuine buyers purchase property, prices will fall

      Solution, we have to build more properties that are cheaper and are in reach of genuine buyers
      OR
      We should increase the duration of installments like 10-15 years.

      LETS SEE WHAT DIRECTION PROPERTY MARKET TAKES IN FEW MONTHS

      Reply
      • Saqib

        on   said 

        Commercial mortgage lending can solve the problem of accelerated payment schedule that the builders offer however, interest rates for mortgage in Pakistan are much higher than they are in the USA, if we were to make a comparison. Amnesty schemes are very unfair and tend to reward bad behavior since those paying higher taxes regularly feel like being cheated upon. In the US, I have seen amnesty schemes but they charge full tax. The only advantage given is that one will not end up in Jail and his or her property/assets confiscated. Regardless of all this, the current amnesty should help the market in medium to long term.

        Reply
        • Saqib
          Amnesty scheme has never worked in Pakistan
          Unfortunately after so many amnesty schemes, just 1% people pay taxes.

          Yes, definitely we need western style mortgages that are affordable and are for long time period to up lift the stagnant property market.

          Reply
          • We need well established commercial mortgage industry so avg. buyer can afford housing at the same time in Pakistan govt. would need to curb black funds going into real-estate. Property prices will become crazy high if both are channeled into real-estate sector together.

            Generally I am against easy lending standards. Easy lending makes general population slave to corporate. It also increases economic volatility. Rewarding bad behavior is the worst thing govt. can do.

            More transparency, less kickbacks, less incentive to steal public funds and/or earn money through non-halal options is another benefit of curbing the use and storage of black funds.

    • Overseas
      Capt (Retd) Shahnawaz Yaqub is a respected realtor in DHA Lahore.
      In this blog he has presented much balanced views about property market.
      His views about DHA Lahore price / investment trends are much appreciated.

      Reply
      • m anwar

        on   said 

        a few days ago, i talked to a real estate dealer, he was asking there is sale and purchase in market, he was asking that property rates are stagnenet

        Reply
      • YOUSUF LODHI

        on   said 

        VERY FUNNY AND UNCERTAIN SITUATION EVEN AFTER AMNESTY SCHEME. BOTH HOUSE BUILDERS AND INVESTORS ARE SCARED AND SEEM TO HAVE LOST CONFIDENCE. FEAR IS PREVAILING AS TO NOBODY KNOWS WHAT WILL HAPPEN IN FUTURE.

        IN SOME AREAS THAT ARE UNDER CATEGORY 4 AND 5 OF FBR TABLE, THERE IS A BIT OF ACTIVITY, OTHERS IN CATEGORY 1,2 FEARFUL RE-ACTION

        OVERALL SITUATION IS WITH CONFUSION.

        Reply
        • YOUSUF LODHI
          True, its really getting interesting day by day
          MARKET TRENDS
          people are buying cheap / affordable small properties
          Large size properties are unable to find buyers even after reducing asking prices by 40%

          INVESTORS
          Investors are reluctant to invest in property sector due to low margins, high taxes and uncertainty

          STOCKS
          @ 46,000

          This looks like that government budget 2016-17 was STOCKS friendly but anti property sector
          Now amnesty scheme looks like that its STOCKS friendly rather than real estate sector friendly

          Reply
          • YOUSUF LODHI

            on   said 

            AFTER TAX AMNESTY SCHEME IN KARACHI, PROPERTIES FALLING UNDER CATEGORY 6 OF DC RATE TABLE AND FBR TABLE ARE GETTING GOOD RESPONSE FROM INVESTORS/BUYERS

            PROPERTIES UNDER CATEGORY 3, 4 AND 5 ARE GETTING AVERAGE RESPONSE

            PROPERTIES UNDER CATEGORY 1 & 2 GETTING BELOW AVERAGE RESPONSE

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