The Federal Board of Revenue (FBR) on Tuesday announced property prices for 16 major cities of Pakistan including Lahore. However, they have recently published fair market values for DHA Lahore and various other societies in the city.
In the case of residential plot, the fair market price is 30 to 35% more than the previous DC value. As far as prices of commercial plots are concerned, the market price is 200 to 250% more than the previous value.
Capital Gains Tax rates
In addition, the government has also reduced the duration of Capital Gains Tax (CGT). Instead of 5 years, the time duration is now 3 years. For the first year, the CGT rate is going to be 10%. The government has lessened the rate to 7.5% and 5% for the second and third year respectively.
If properties purchased before 1st July 2016 are sold within the 3 year time period then CGT will be charged at a flat rate of 5%.
In the case of government and army officers, these are the following CGT rates:
1- 5% for first year
2- 2.5% for second year
3- 1.5% for third year
General views of the public
There are currently mixed views on how the new prices will impact the market. Some experts believe that increase in market value should be followed by a decrease in the percentage of taxes. Few people believe that the new market values will result in an ultimate loss for the government. The number of transactions has reduced greatly and as a result government’s revenue has also gone down.
In your opinion, what effect will the new prices have on the market?