Real estate business brought under tax net * New budget includes taxes on real estate transactions and rented propert

[LRE]

Real estate business brought under tax net

* New budget includes taxes on real estate development, real estate transactions and rented property

Staff Report

ISLAMABAD: The government has proposed taxes on the real estate business in the federal budget announced on Wednesday, bringing the sector under the tax net for the first time.

The proposed budget for the 2008-09 fiscal year requires builders to pay a Rs 50 per square foot tax on covered constructed area and land developers to pay Rs 100 per square foot of developed land.

The 2007-08 Finance Bill also includes a 25 percent tax on real estate transactions exceeding Rs 250 million, 30 percent on transactions exceeding Rs 350 million and a 35 percent tax on real estate transactions exceeding Rs 500 million.

The government has also proposed a five percent tax on rented property if the gross rent exceeds Rs 150,000, Rs 12,500 and 10 percent if the gross rent exceeds Rs 400,000, and Rs 72,500 and 15 percent if the gross rent is more than Rs 1,000,000.

If the property is owned by a company, a company tax of five percent will be charged if the gross rent is less than Rs 400,000, Rs 20,000 and 10 percent if the rent is more than Rs 400,000 and Rs 80,000 and 15 percent if the gross rent exceeds Rs 1,000,000.

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