FBR Eliminates Holding Period for Property Capital Gains Tax in 2024

In a recent development, the FBR has removed all the holding period requirements for capital gains tax on properties for properties purchased on or after July 1, 2024.

Under new rules, as detailed in an FBR income tax circular, all profits derived from the disposal of immovable property in Pakistan shall henceforth be taxed as capital gains as prescribed in the First Schedule.

Previously, rates levied were based on how long a person held their property with the maximum being charged at 15% when a plot was sold before one year ended. This rate decreased over time to reach zero percent for plots left more than six years, houses above four years, and flats beyond two years.

Property sales will now attract a uniform tax rate of 15% to sellers who are already listed on the Active Taxpayers List (ATL) as of that date commencing on July 1, 2024.

For individuals and associations of persons (AOPs) not on the ATL, taxes will follow Division I in Part I of the First Schedule. Unlisted companies will be taxed under Division II within this same schedule. Nonetheless, minimum rates for individuals and AOPs will not go below 15%.

For properties acquired on or before June 30, 2024, the old tax system will still apply, meaning gains will be taxed based on the holding period and the rates that were in effect before the Finance Act, 2024.