Dear Fellows,
Really need an expert advice as I am extremely confused :(
(Note: My understanding of new tax policies might be flawed as I am not an expert)
I am planning to buy a 1 Kanal house in
DHA Lahore Phase 6 Block J before Eid. Its for living and not for an investment and I can wait if needed till the market gets stable and new tax policies become clear. Is it the right time to buy or should i wait ? I might be spending around 40M, going for a simple house.
Now the situation is extremely confusing owing to the new taxation measures that would get effective on 1st July, 2018. Also there is a chance that the new taxation measures may not be implemented in original form due to pressures from the real-estate dealers unions.
Anyway, I understand that following new policies would drastically effect the
prices in real estate market if get implemented after 1st July, 2018:
1...Non-filers cannot buy a property of more than 5Mn. Note that 5Mn is the declared value which could not be the FBR value anymore. So considering the below mentioned buy-back policy at 100% excess, a non-filer can buy a property of no more than 10Mn. This would significantly reduce the number of investors or genuine buyers as most buyers still fall in the non-filer category. Even if they are filer, very few would have a declared saving/income of 5Mn in wealth statement. One can imagine how this reduction of buyers would impact the property prices.
2...Abolishing of FBR rates and implementation of Buy-back policy at 100% excess of the declared price.
I understand that this means that for a property of 40M, safe declaration would be at least 20Mn+ which is way high compared to the current FBR rates. Hence the amount of taxes will increase. Also 20Mn will have to be shown in the wealth statement as only the filer can do this transaction of more than 5Mn. As per my understanding, very few would have a declared saving/income of 20M in the wealth statement. So this will REDUCE the investors/genuine buyers and will have a HUGE impact on property prices.
BUT if i buy the same property now before July 1st, then taxes will be on FBR rates, the tax amount will be less and I can show only the FBR rate (Which is around 7Mn at the moment for 1K in DHA) in my wealth statement and hence reducing less from my declared savings/income in wealth statement. Though I might pay HIGHER prices as compared to the post 1st July prices losing millions later on. Is the saving in taxes and savings in declared income in wealth statement worth losing in the actual price of the property ?
Please advise if my understanding is correct or flawed and what should I do considering the pros and cons of buying now.