FBR Eliminates Holding Period for Property Capital Gains Tax in 2024

Lahore – August 2024: The Federal Board of Revenue (FBR) has abolished the holding period requirement for property capital gains tax for properties purchased on or after 1 July 2024. According to news sources, this recent development means that all profits from the disposal of immovable property in Pakistan will now be taxed as capital gains, as outlined in the First Schedule of the FBR income tax circular.

Previously, the tax rates were determined based on the duration for which a property was held, with the maximum rate of 15% applied if the property was sold within a year. This rate decreased over time, eventually reaching zero percent for plots held for over six years, houses for more than four years, and flats for over two years.

Now, starting from 1 July 2024, property sales will incur a uniform tax rate of 15% for sellers listed on the Active Taxpayers List (ATL). For individuals and associations of persons (AOPs) not on the ATL, taxes will adhere to Division I of Part I of the First Schedule, while unlisted companies will be taxed under Division II of the same schedule. However, the minimum tax rate for individuals and AOPs will not fall below 15%.