Guide to Property Taxes in Pakistan
Effective Tax Rate on Rental Income |
|||
| Monthly Income | US$1,500 | US$6,000 | US$12,000 |
| Tax Rate | 18.14% | 23.28% | 24.14% |
Nonresident individuals are taxed only on their Pakistani-sourced income.
Rental Income Tax
There are five categories of income: (1) employment income, (2) income from business, (3) income from property, (4) capital gains and (5) income from other sources.
Income tax is levied at progressive rates. Rental income is taxed at rates from 0-25% depending on the income level.
| Taxable Property Income, PKR | Tax Rate |
| Up to PKR 300,000 | 0% |
| PKR 300,00 - 600,000 | 5% on band over 300,000 |
| PKR 600,000 - 2,000,000 | 10% on band over 600,000 |
| Over PKR 2,000,000 | 25% on band over 2,000,000 |
Property Tax
In Pakistan, properties are taxed at an effective rate of 1% of the fair market value of the property.
Capital Gains Tax
Capital Gains Tax is levied on the profits of the sale of a property at a rate of 15%.
Corporate Tax
Corporate tax rates vary from 20% to 39% with most companies falling under the "small company" category which is taxed at 20%. To be classified as a small company, it has to have been formed after 1. July 2005; not have more than 250 employees and have a turnover that is smaller than PKR 250 million.
Property Buying Costs and Taxes in Pakistan
|
Transaction Costs |
||
| Who Pays? | ||
| Transfer tax | 8% | buyer |
| Notary fees | 0.10% | buyer |
| Legal fees | 0.50% - 1.00% | buyer |
| Real Estate Agent Fee | 1.00% - 2.00% 1.00% - 2.00% |
buyer seller |
| Total costs paid by the buyer: | 9.60% - 11.10% | |
| Total costs paid by the seller: | 1.00% - 2.00% | |
| ROUNDTRIP TRANSACTION COSTS | 10.60% - 13.10% | |
| Source: Global Property Guide | ||