The coalition government has brought in real estate tax changes in its latest budget in a bid to fulfil the conditions for the International Monetary Fund (IMF) bailout package.

Reports suggest the new tax regime increased Capital Gains Tax (CGT) and Advance Tax on property sales, impacting filers, late filers, and non-filers differently.

To bolster revenue collection and ensure a more equitable tax system. record-high taxes on plots and constructed lands are too brought in.

The finance minister’s budget speech highlighted the importance of equitable taxation and he promised the government would monitor the implementation of these taxes closely to address any issues that may arise.

These tax rates are expected to affect the real estate market. It is believed that the higher tax rates, particularly the flat 15% CGT for all properties regardless of the holding period, may discourage speculative investments and lead to a more stable market. However, there are concerns that these measures might also dampen the overall activity in the property market, potentially affecting related industries.

Detailed breakdown

Capital Gains Tax Rates for Property For Filers

Duration                              All Properties

Up to 1 year                              15%

1 to 2 years                               15%

2 to 3 years                               15%

3 to 4 years                               15%

4 to 5 years                              15%

5 to 6 years                              15%

Over 6 years                            Flat 15%

Advance Tax on Sale of Immovable Property

Property Value                         Filers        Late Filers           Non-Filers

Up to Rs. 50 million                  3%                   6%                    10%

Rs. 50-100 million                    3.5%                7%                    10%

Above Rs. 100 million              4%                   8%                    10%