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Posted in all LRE WhatsApp Groups by me earlier today,

(104038)
   CMY
Thursday, July 14, 2016 12:42 AM 
Reply: >
Many friends are keep insisting me to give new taxes rates comparison from past year and my take on impact of taxes after market opened this Monday . I am still waiting for more details and also because things are going to be changed to positive side soon anyway. Let's wait for at least one week for an accurate assessment of market reaction and many DC rates new tax rate on empty plots notifications etc. Even DHA Lahore is doing transfer today at old DC rate as new notification perhaps not officially reached to them yet. So Plzzzzz wait and relax and enjoy . Good news soon may change whole game plan.

*Govt already panicked a lot due to market reaction like a complete halt in any property transactions. Have called meeting of all stake holders mainly cancelation of billions worth deals etc and angered all serving and retired military officers as DHAs in all cities are getting hurt most and get nothing from additional collected taxes. Imagine each officer seeing a deal canceled or having 20 lacs injection in a day on each plot with Govt ill planned property taxes :). Dar sahib told by friends hath howla rakhu sir gee. Govt also very afraid and have realized now tax collection could be less than half of last year if nothing done to reverse changes very fast.

Wait for good news of tax rates reduction or possibly a complete reversal of all changes very soon. As soon as next month if not next week.

Among many other proposals a *Strong workable proposal in discussion to get a flat 2 % capital gains tax (Federal CGT) on current fair market rates at transfer time from sellers regardless when and at what price a property was bought. All money after paying 2% will be white now :)* (Fair market price to be fixed by State Bank evaluators in advance like DC rates). Simple and acceptable to all stake holders.

This is or may be was a bigger blunder of Govt than freezing foreign currency accounts in past and hurting foreign remittance in past. They have shaken conference of expatiates people in Pakistan property market very badly already.

I am also attaching some important ongoing tax issues reads in PDF format for only boring people like me :)

Enjoy

Choudry Mujahid Yasin (CMY)
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AHMAD HASSAN® replied on Thursday, July 14, 2016 01:52 AM 

And what about 10% tax on empty plots? That is nightmare for investors. This is not tax but interest rates of GOVT to hold property in Pakistan. Tax if you sell before 5 years, tax if you keep more than two years, tax if you start construction. GOVT tried to make a chess check for property holders. But this practice will also reduce WHT that GOVT collect from banks. Less property transactions means less activity in banks. Unfortunately remitance already hit due to current job cuts in GCC but this will do clean sweep. Next impact is coming on $ because GOVT trying to complete mega projects before 2017. This will empty GOVT pockets. They ve fired bullet on own feet and recovery isn't easy now.
CMY replied on Thursday, July 14, 2016 02:09 AM 

http://tribune.com.pk/story/1141330/one-time-amnesty-scheme-proposals-moved-calm-jittery-players-real-estate-sector/

They just put same info in better words than my gulabi English :) Now will beeasy to uunderstand

Choudry Mujahid Yasin (CMY)
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Abdal® replied on Thursday, July 14, 2016 03:35 AM 

@CMY. Your input, comments and foresight is always valuable. However, in your recent posting above I tend to disagree to your comments to the extent ” these amendments are blunder and related confidence shattering of expatriate Pakistanis”. Let me reiterate my point of view which is open to discussion and debate as it may add value to the forum members who make not be that much conversant with tax matters. The amendments under discussion are targeted towards:
1) Controlling the black money investment in real estate sector wherein it is used to hide money and then make gains
2) Checking the speculative trading in the real estate sector wherein even properties exchange hands just on biana number of times before actual purchase happens

The express tribune article which you posted states that there are Rs 7,000 billion black money invested in real estate sector and the DC rate in Karachi Defense is Rs 1,650 Vs Market rate of Rs 155,000, which translate in to 94 times or a multiple of 94 between DC Rate and Market Rate. Can trying to controlling of the above scenario is blunder. At least for expatriate Pakistanis whose money is while the amendments are a blessing in disguise and should not worry apart from market correction which they are small participants. For sure they are not among the selected people having billion of Rs at their disposal who are manipulating the market and have put the properties beyond the purchasing power of an ordinary Pakistani who is helpless to even buy a single plot or house for his residence. For an expatriate Pakistani the advise is as under:

1) Send your money through normal banking channel to Pakistan and let your money remain white
2) If you want to purchase any property now, get the sale purchase agreement inked at the market price not the DC rate. By signing it and declaring it (when required) at market price will let your money remain white. Currently, the expats were forced to convert their while money partially in black when he had to sign a sale purchase agreement at DC rate. Say you buy a plot for 100 lacs with foreign remitted money but sale purchase agreement at DC rate was made at 25 lacs, infact you were converting your 75 lacs white into black
3) Sale of property have some repercussion at this stage. So better hold for the time being till the picture is clear

All in all, these amendments are positive which will make the property market realistic and speculative. The matter will be resolved with FBR in due course but I hope and expect that FBR will not budge to any proposal which will strengthen black money holders and speculative investors. Cheer up.
Abdal® replied on Thursday, July 14, 2016 05:57 AM 

please disregard if it get published again as it is giving an error.@CMY. Your input, comments and foresight is always valuable. However, in your recent posting above I tend to disagree to your comments to the extent ” these amendments are blunder and related confidence shattering of expatriate Pakistanis”. Let me reiterate my point of view which is open to discussion and debate as it may add value to the forum members who make not be that much conversant with tax matters. The amendments under discussion are targeted towards:
1) Controlling the black money investment in real estate sector wherein it is used to hide money and then make gains
2) Checking the speculative trading in the real estate sector wherein even properties exchange hands just on biana number of times before actual purchase happens

The express tribune article which you posted states that there are Rs 7,000 billion black money invested in real estate sector and the DC rate in Karachi Defense is Rs 1,650 Vs Market rate of Rs 155,000, which translate in to 94 times or a multiple of 94 between DC Rate and Market Rate. Can trying to controlling of the above scenario is blunder. At least for expatriate Pakistanis whose money is while the amendments are a blessing in disguise and should not worry apart from market correction which they are small participants. For sure they are not among the selected people having billion of Rs at their disposal who are manipulating the market and have put the properties beyond the purchasing power of an ordinary Pakistani who is helpless to even buy a single plot or house for his residence. For an expatriate Pakistani the advise is as under:

1) Send your money through normal banking channel to Pakistan and let your money remain white
2) If you want to purchase any property now, get the sale purchase agreement inked at the market price not the DC rate. By signing it and declaring it (when required) at market price will let your money remain white. Currently, the expats were forced to convert their while money partially in black when he had to sign a sale purchase agreement at DC rate. Say you buy a plot for 100 lacs with foreign remitted money but sale purchase agreement at DC rate was made at 25 lacs, infact you were converting your 75 lacs white into black
3) Sale of property have some repercussion at this stage. So better hold for the time being till the picture is clear

All in all, these amendments are positive which will make the property market realistic and speculative. The matter will be resolved with FBR in due course but I hope and expect that FBR will not budge to any proposal which will strengthen black money holders and speculative investors. Cheer up.
Real Estate is best replied on Thursday, July 14, 2016 07:54 AM 

@Abdal. nothing is new in your Taqreer,these things have been dicussed so many times before so what is use of keep repeating same things?
Szaidi® replied on Thursday, July 14, 2016 09:13 AM 

Dear Friends,

People like us are on receiving side. We can only comments and cannot do any thing. SO NO NEED TO PANIC . We have to follow only. It is game of big fishes, like SAAD Rafique, Aleem dar, Ch: Nisar, Aqeel kareem Daddy and many others like them who has billions of rupees investment in real estate.
SIM replied on Thursday, July 14, 2016 12:32 PM 

Dear Abdal sahib, your point is well taken but allow me to have little different view. Being an overseas Pakistani myself, I believe that expats will be affected most with current tax changes.

1-Most of the overseas Pakistanis have their hard earned life saving as real estate assets. Sitting abroad they cant run a business , so whatever they save,they invest in property. Any substantial correction in property prices(which is expected if current tax scenario remains) will wipe their savings. A person with black money may absorb a shock of huge decline in his asset price but will be difficult for someone who has saved every single penny.
2- Overseas Pakistanis are mostly non filers, so they have to pay double the taxes as compared to a filer. So by default in the same group as people with black money.
3- Most of the expats build their houses when they permanently return home. So if the news of 10% tax on vacant plots is correct, this will be a huge amount for them to pay.
4- When corrupt politicians, bureaucrats make billions by looting the country, it is considered States responsibility to prove charges against them. Otherwise they are innocent. While overseas Pakistanis have to prove that all their transactions are documented, other wise they are guilty.

I hope things will settle as brother CMY has mentioned
M Zahid® replied on Thursday, July 14, 2016 12:44 PM 

Very interesting to read some comments!
Cooperative societies were bankrupted because they heavily loaned ittefaq group. Poor people lost their life savings but BIG SHARKS never returned loans and were written off.
Then comes the foreign currency account freezing, people particularly expats never trusted back Pakistani's banks.
Now comes ruthless property taxing. when you try to make blind alley a one way street then their is no exit left for escape. People will not enter if it is so heavily taxed and currency depreciate grossly every 10 years. Yes you document the economy through all available channels but not blocking the flow of transactions. There is already 6 to 8% tax on property transaction but if govt is adamant to double it up with single stroke of pen then message is loud and clear 'Expat money is not need in real estate". Fine! expat have many other options specially from Europe and USA. Also middle east present nearly similar opportunities with more stable currencies with better prospects especially UAE.
Current rulers will walk away with their own bounties and in the end loss will be born by real people of Pakistan.
Kureshi® replied on Thursday, July 14, 2016 01:28 PM 

Couldn't agree more with Zahid sb's comments.

It's not just limited to expats. For even normal resident Pakistanis real estate the best and perhaps the only way to combat inflation and make some savings for retirement , daughters weddings and kids higher studies and as a means to earn some rent after retirement. It is sad that this govt us taking it away in the name of black money. There are numerous other ways people conceal their black money , then why are they targetting only real estate where there are mostly innocent people. I bet there is a minority of investors and alot of dealers who can be dealt exclusively but I am sure this move by the govt is planned and for some vested interest.

Many people are forced to convert their white money to black due to stupid govt property rules.i think govt should resolve this amicably.
Well wisher ( Please Register ) replied on Thursday, July 14, 2016 07:09 PM 

These newly imposed taxes are totally a nonsense by the govt..it wont help anyone rather it will disturb everyone related to real estate business...less buying selling means less profits & even lesser tax collection by the govt compared to last year. ..black sheeps will skip away as they are well known about dealing with such situation...govt wont achieve the desired results in that way rather distrust ion of huge revenue in the country for real estate
new tax replied on Thursday, July 14, 2016 07:53 PM 

It seems they wants to pull all investments from Pakistan to UAE or other countries where they have their own investments & benefits...after implementation these taxes big money Will be leaving Pakistan and ultimately it may b not be good for counties economy as well...they said people Will invest in industry & other business in Pakistan which may not be true...even industrialists and other business community also invest some stake in real estate in order to sustain their business on hard times by selling property where needed...who will benefit from that....coming to the genuine buyers or home seekers for living...It will also not help them as well because small housing societies Will delay their development and everyone wants his property to grow appropriately for his familys future...
MIT® replied on Thursday, July 14, 2016 10:03 PM 

Abdal's comments have no standing at all. The new taxes in fact will further kill the heavy debt economy of Pakistan by slowing or even jamming the activities in Real Estate. Instead of solving the matter skillfully the Noora party has aggravated it inviting more corruption.
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