Pakistani investors or common money savers generally invest in property in hope of profit. And indeed, it gives profits obviously. However, recently FBR has imposed some new property taxes for which landlords and stakeholders wonder how to avoid property taxes in Pakistan. Property taxes are a fact of life for many homeowners in Pakistan. United Green Marketing brings number of legal ways to reduce your property tax liability, or even avoid it altogether. Let us educate you on saving or exempting from property taxes.
Claim an Exemption from Property Tax
A little good thing about property taxes is that FBR has categorized property tax exemptions. The first step is to see if you qualify for any of the exemptions. Some common exemptions are as follow:
- Agricultural Land
- Religious Institutions
- Government Buildings
- Public Welfare Buildings
Properties with No Tax Liability
Properties with a land area of less than 5-Marla in a non-category “A” locality. Properties that are not capable of yielding an annual rent of more than PKR 43200/- Single houses that are not yielding an annual rent of more than PKR 64800/- and are occupied by the owner for his residence. Buildings owned by widows, minor orphans, and/or disabled persons (Shelter Home, Old Home—Not-For-Profit) To claim an exemption, you will need to submit the Rule No. 223 counterfoil to the FBR authorities. You can download the Rule Form from the FBR website.
Tips to Saving Property Tax
Reduce the Value of Your Property
The capital of your property defines your property taxes. If you are allowed to reassess or estimate value of your property, you may have to pay lower tax. There are a number of legal ways to reduce property taxes that we discuss in the following.
- Claim Depreciation: If your property has depreciated in value since you purchased it, you can claim this depreciation on your property tax return.
- Making Improvements to Your Property: If you make improvements to your property, such as adding a new roof or bathroom, you can claim the cost of these improvements on your property tax return.
- Displacing the property: If you displace your property with another property, such as by building a new house on the same land, you may be able to reduce your property tax liability.
Some Ways to Save Property Tax
There are some legal procedures through which you can save or even be exempted from the property taxes.
Challenge the Assessment
If you are not satisfied with the assessed worth of your property, you may file dispute it with the FBR review process. To do this, you will have to produce an evidence to support your solid claim. For instance, you may provide comparable sales data for similar properties in the area where your property locates.
Claim Deductions
You can also claim deductions available for property taxes.
Mortgage Interest
If your property holds a mortgage by any bank or financial institution, you can file a submission to deduct the interest you pay to be deducted from your property. Mortgage (Girvi) can be a tax deductive claim from your property tax liability.
Property Taxes Paid on Other Properties
If you own other properties in Pakistan, you can deduct the property taxes you pay on those properties from your property tax liability.
Capital Value Tax (CVIT)
If you paid CVIT on the purchase of your property, you can deduct this amount from your property tax liability.
Keep Your Property in Good Condition
Keeping the property in maintained condition can reduce the tax rates. Though, it is less likely to be reassessed for higher taxes. You are to ensure to perform regular maintenance on your property, such as painting, repairing, and landscaping.
Be Informed with the Tax Deadlines
Keep an eye on tax pay announcement from FBR. Try to pay your property taxes within the deadline to avoid due payment penalties. The deadline for paying property taxes in Pakistan varies from province to province.
Hire a Tax Advisor
If you are not familiar with your property taxes, or if you want a legal assistance you can hire a property tax lawyer for the property tax assessment. A certified and authorized tax advisor can assist you in making sense of your property tax range. So, they help to develop a strategy to reduce your tax liability.
Final Words:
Avoiding property taxes in Pakistan is not always possible, but there are a number of ways to reduce your tax liability, or even avoid it altogether. By following the tips above, you can save money on your property taxes.
Disclaimer:
This property tax guide is for informational purposes only and should not be considered as legal challenge. Please consult with a legalized and authorized tax advisor to discuss your specific case. United Green Marketing promotes legal and ethical practices for property development. For further assistance, you can reach us.
