Guide to Property Taxes in Pakistan

Non-resident individuals are generally subject to Pakistani income tax on Pakistan-source income, including taxable income and gains arising from real estate situated in Pakistan.

Rental Income Tax

Pakistan recognizes several categories of taxable income, including salary, business income, income from property, capital gains and income from other sources.

Rental income from Pakistani real estate is generally taxable under Income from Property.

For an individual or association of persons, the applicable property-income tax rates for Tax Year 2026 are:

For comparison purposes, annual gross rental income of $18,000, $72,000 and $144,000 is assumed to incur deductible expenses equal to 30% of gross rent, leaving estimated net taxable rental income of $12,600, $50,400 and $100,800, respectively.

Applying Pakistan's progressive tax rates for non-salaried individuals, together with the applicable high-income surcharge, results in estimated annual income tax of approximately $2,766, $21,336 and $46,284, respectively. This represents effective income-tax burdens of approximately 15.4%, 29.6% and 32.1% of gross rental income.

The 30% expense assumption is used solely to standardize the international comparison. Actual taxable rental income is calculated using the deductions permitted under Pakistani tax law.

Capital Gains Tax

Pakistan taxes gains arising from the disposal of immovable property, but the applicable treatment depends significantly on when the property was acquired.

For immovable property acquired on or after 1 July 2024, gains realized by a person whose name appears on the Active Taxpayers List are generally subject to a 15% capital gains tax rate, irrespective of the holding period.

Different and potentially higher rates can apply to persons who are not on the Active Taxpayers List.

Property acquired before 1 July 2024 remains subject to the earlier holding-period-based regime, under which the applicable tax rate depends on the type of property and the length of ownership.

The taxable amount is based on the capital gain, rather than simply the property's gross selling price.

Corporate Taxation

The standard corporate income tax rate for an ordinary Pakistani company is generally 29%.

A qualifying small company is subject to a reduced corporate income tax rate of 20%, provided it satisfies the statutory requirements.

The definition of a small company includes conditions relating to incorporation, paid-up capital and reserves, number of employees, annual turnover and corporate-group status. Therefore, it should not be summarized solely by reference to a PKR 250 million turnover threshold.

Rental income and taxable real-estate gains earned by a company are generally included in the company's taxable income under the applicable corporate tax rules.

Certain companies can also be subject to additional taxes, including Super Tax, depending on the level and nature of their income. Consequently, the effective corporate tax burden can exceed the ordinary 29% corporate income tax rate.

Property Buying Costs and Taxes in Pakistan

Property Holding Tax

Pakistan does not impose a uniform nationwide annual property tax.

Recurring property taxation is primarily imposed at the provincial and local level, and the applicable tax base, rates, exemptions and valuation methodology depend on where the property is situated.

For example, provinces operate their own Urban Immovable Property Tax regimes. Consequently, annual holding tax should be evaluated according to the specific province and municipality rather than applying a single nationwide percentage.

Pakistan also has separate federal tax provisions relating to immovable property, including rules based on the fair market value of certain capital assets. These should not be confused with ordinary provincial annual property tax.

Between different municipalities, the average annual property tax rate will average around ~0.1% of the property market value.