Property Taxes in Pakistan 2025: Rates, Updates, Exemptions, and Sale Taxes

Property ownership in Pakistan comes with its fair share of responsibilities, and one of the most significant is paying property taxes. Whether you’re a homeowner, an investor, or someone looking to sell a property, understanding the tax landscape is crucial.

In 2025, the rules around property taxation have seen updates that affect everyone from regular filers to non-filers. So, how much is property income tax in Pakistan?

What’s new this year? Who gets a break from these taxes, and how much will you owe when you sell? Let’s break it all down in this detailed guide.

How Much Is Property Income Tax in Pakistan?

Property income tax in Pakistan primarily applies to rental income or deemed income from owning property. If you’re earning rent from a property whether it’s a house, apartment, or commercial space the Federal Board of Revenue (FBR) taxes that income based on your status as a filer, late filer, or non-filer.

For 2025, if you’re a resident individual owning immovable property, there’s a concept called deemed income to consider. This kicks in under Section 7E of the Income Tax Ordinance, 2001. Here’s how it works:

• Calculation: Deemed income is set at 5% of the fair market value of your property.
• Tax Rate: You pay 20% of that deemed income, which effectively translates to a 1% tax on the property’s fair market value annually.
• Example: If your property is worth PKR 50 million, the deemed income is PKR 2.5 million (5%). You’d then pay PKR 500,000 (20% of 2.5 million) as property income tax.

For actual rental income, the tax is calculated on a net income basis after allowable deductions (like administration costs up to 4% of gross rent). The rates depend on your total taxable income and fall under progressive slabs ranging from 0% (for income up to PKR 600,000 annually) to 35% (for income exceeding PKR 6 million).

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If you’re not on the Active Taxpayers’ List (ATL), expect withholding tax rates on rent to double making it costlier for non-filers.

The takeaway? Filing your taxes on time saves money and keeps your property income tax manageable.

What Is the New Property Tax in Pakistan?

The 2024-2025 federal budget brought significant changes to property taxation, effective from July 1, 2024, and still relevant as we move through 2025. The government, via the FBR, has revamped how property taxes are applied to boost compliance and revenue. Here’s what’s new:

• Capital Gains Tax (CGT) Overhaul: Previously, CGT on property sales depended on how long you held the property (1-6 years), with no tax after six years. Now, for properties acquired on or after July 1, 2024:

• Filers pay a flat 15% CGT, regardless of holding period.
• Non-filers face a progressive rate from 15% to 45%, based on the property’s value and their income slab.
• Advance Tax on Transactions: When buying or selling property, both parties pay an advance tax (withholding tax) under Sections 236C (sale) and 236K (purchase). Rates vary by property value and taxpayer status:

Advance Tax on Property Transactions

Under Sections 236C (sale) and 236K (purchase), both buyers and sellers must pay advance tax based on property value and taxpayer status:

• Federal Excise Duty (FED): A new 5% FED applies to the sale of new plots, residential, and commercial properties, aiming to curb speculative buying and stabilize the market.

These updates simplify the tax structure but hit non-filers hard, encouraging more people to join the tax net. If you’re planning a property deal in 2025, staying compliant is more important than ever.

Who Are Exempted from Property Tax in Pakistan?

Not everyone has to pay property taxes, and the exemptions in 2025 are designed to protect certain groups or property types. Here’s who gets a pass:

• Single Property Owners: If you own just one immovable property and live in it, you’re exempt from the deemed income tax under Section 7E.
• Low-Value Properties: Properties with a fair market value below PKR 25 million are exempt from deemed income tax.
• Special Allottees: Properties allotted to:
  • Dependants of a Shaheed (martyr) from the Pakistan Armed Forces.
  • War-wounded personnel or their dependants.
  • Ex-servicemen or serving personnel of the armed forces, certified as original allottees.
• First-Year Buyers: If you’ve just bought a property and paid advance tax on the purchase, you’re exempt from deemed income tax in the first year of ownership.
• Government-Owned Properties: Properties owned by federal, provincial, or local governments for public use don’t face these taxes.
• Small Residential Units: In some provinces (like Sindh under the Urban Immovable Property Tax Act, 1958), residential properties on plots under 120 square yards or with annual rental values below PKR 4,320 are exempt.

Widows, orphans, and disabled individuals may also qualify for provincial exemptions if their property’s annual rent is below PKR 12,150. Check your provincial rules, as exemptions can vary—Punjab, Sindh, and Khyber Pakhtunkhwa each have their own twists.

How Much Tax on Property Sale in Pakistan?

Selling a property in Pakistan triggers multiple taxes, and the amount depends on your tax status, the property’s value, and when you bought it. Let’s break it down for 2025:

• Capital Gains Tax (CGT):
  • Properties Acquired Before July 1, 2024: The old rules apply CGT ranges from 0% (held over 6 years) to 10% (held 1-6 years), depending on the holding period.
  • Properties Acquired On or After July 1, 2024:

• Filers: 15% flat rate on the gain (sale price minus purchase cost).
• Non-Filers: 15% to 45%, based on income slabs and property value.
• Example: You bought a plot for PKR 10 million and sell it for PKR 15 million. The gain is PKR 5 million. A filer pays PKR 750,000 (15%), while a non-filer could owe up to PKR 2.25 million (45%).
• Advance Tax (Withholding Tax) on Sale (Section 236C):
  • Filers: 3% of the property’s gross value (e.g., PKR 450,000 on a PKR 15 million sale).
  • Non-Filers: Rates double or more, depending on FBR adjustments.
  • This is collected at the time of transfer and is adjustable against your final tax liability.
• Capital Value Tax (CVT): Set at 2% of the property’s recorded value (e.g., PKR 300,000 on a PKR 15 million sale), paid by the buyer in most cases but often negotiated in the deal.
• Stamp Duty: A provincial tax, typically 1-3% of the property value, varies by region (e.g., 1% in Punjab = PKR 150,000 on a PKR 15 million sale).

So, for a PKR 15 million property sale as a filer, you might pay:

• CGT: PKR 750,000 (on a PKR 5 million gain).
• Advance Tax: PKR 450,000.
• Total (excluding buyer-paid CVT/Stamp Duty): PKR 1.2 million.

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Non-filers could see that jump significantly—up to PKR 2.7 million or more with higher CGT rates. Timing your sale and staying on the ATL can save you a bundle.

Why Understanding Property Taxes Matters in 2025

Pakistan’s real estate market is a powerhouse, contributing heavily to the GDP, but it’s also one of the most taxed sectors. The 2024-2025 budget changes reflect a push for transparency and fairness, targeting speculative investors while sparing genuine homeowners where possible.

Whether you’re renting out a property, buying your dream home, or cashing out on an investment, knowing these tax details helps you plan smarter.

Paying on time not only avoids penalties but also supports the infrastructure we all rely on roads, schools, hospitals, you name it.

Got questions about your specific situation? Drop them in the comments below, and let’s keep the conversation going!