Selling property in Pakistan? Capital Gains Tax on immovable property, as defined by the Federal Board of Revenue, is charged on a sliding scale based purely on how long you held it — the longer you wait, the less tax you pay, and after 6 years it drops to zero entirely. Open plots, constructed houses, and flats each have slightly different schedules, so the same holding period can mean a different rate depending on what you’re selling. Run your numbers through the calculator below, then check the table for your exact bracket.
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Capital Gains Tax on Immoveable Property – Holding Period Rates
| Holding Period | Open Plots | Constructed Property | Flats |
|---|---|---|---|
| ≤ 1 Year | 15% | 15% | 15% |
| > 1 Year, ≤ 2 Years | 12.5% | 10% | 7.5% |
| > 2 Years, ≤ 3 Years | 10% | 7.5% | 0% |
| > 3 Years, ≤ 4 Years | 7.5% | 5% | 0% |
| > 4 Years, ≤ 5 Years | 5% | 0% | 0% |
| > 5 Years, ≤ 6 Years | 2.5% | 0% | 0% |
| > 6 Years | 0% | 0% | 0% |
One thing clients frequently get wrong: the holding period is measured from the date of acquisition (registration/transfer, not the sale agreement date) to the date of disposal, and the “flats” column zeroes out much faster than plots — a mistake here can mean overpaying by a significant margin on a large sale. If you’re planning to sell and want the numbers checked before you commit, get in touch via our contact page.
Worked Example
Suppose you bought a residential plot and sold it 2.5 years later for a gain of PKR 3,000,000. Since the holding period falls in the “> 2 Years, ≤ 3 Years” bracket, the applicable rate for open plots is 10% — so tax on the gain would be roughly PKR 300,000, before any allowable deductions (transfer fees, documented improvement costs, etc. that reduce your actual taxable gain). Compare that to selling the same plot within the first year: at 15%, the same PKR 3,000,000 gain would cost PKR 450,000 in tax — a real, quantifiable reason to hold longer if you have the flexibility to.
An Important 2024 Change Worth Knowing
Property acquired before 1 July 2024 is taxed under the older holding-period-based regime shown in the table above. Property acquired on or after 1 July 2024 falls under a different framework — capital gains are taxed under the Normal Tax Regime, with the rate capped at 15% for persons on the Active Taxpayer List. Which regime applies to your specific transaction depends on your acquisition date, so this is one of the first things we check before running any capital gains estimate for a client — don’t assume the holding-period table above automatically applies to a recent purchase.
What Counts as “Holding Period Start”?
The clock starts from your registration/transfer date (the date the property is legally transferred into your name at the relevant land authority), not the date you signed a sale agreement or paid a token amount. This distinction has cost more than one client an extra rate bracket because they assumed the earlier agreement date counted.
Frequently Asked Questions
Does this apply to inherited property?
Inherited property has its own treatment for determining the acquisition date and cost basis — generally the holding period and cost are inherited from the previous owner under specific rules, rather than starting fresh at the date of inheritance. This needs to be checked case by case.
Can I deduct the property’s improvement costs before calculating the gain?
Documented capital improvement costs and the cost of transfer (registration, legal fees) are generally deductible from the sale proceeds before arriving at the taxable gain — keep receipts, since undocumented costs typically won’t be accepted.
What if I sell at a loss?
No capital gains tax is due on a loss, and depending on the circumstances, a capital loss may be adjustable against other capital gains in the same tax year — it does not offset your regular income.
FAQs
Is capital gains tax different for inherited property?
The holding period generally starts from when the deceased originally acquired it, not from when you inherited it — this can push you into a lower or even 0% bracket immediately if the original owner held it long enough. Worth checking before assuming your clock just started.
Do I still pay CGT if I reinvest the sale proceeds into another property?
Yes — Pakistan doesn’t currently have a rollover exemption for reinvesting into new property the way some countries do. The tax is triggered by the disposal itself, regardless of what you do with the money afterward.
What if I sell at a loss?
No capital gain, no CGT — but a capital loss on immovable property generally can’t be adjusted against other income heads, so it doesn’t create a refund or offset elsewhere on your return.
