Revision expected in FBR valuation tables

Revision expected in FBR valuation tables

revision

The FBR valuation tables have left many genuine buyers, authentic investors and even sellers so confused that property transaction volume has seen a major drop throughout the country. Please note that, as directed by the FBR, the Advance Tax and Capital Gains Tax on property transactions carried out after July 01, 2016 will be calculated per the FBR rates given in the valuation tables and not on the Deputy Collector’s rate.

So naturally, it is only logical to demand that these rates be made more realistic. Well, I have good news for you; the government is actually looking to revise valuation tables by bringing them down, at least in the DHA developments initially. According to a news source, the government may reduce the valuation table rates of property in DHA by one third as, reportedly, DHA authorities complained that property valuation rates for DHA were much higher than the rates quoted for Bahria Town. The authority raised these concerns before the Finance Minister Ishaq Dar who asked the FBR to address this issue, according to the news source.

However, it is not clear if the rates will be fixed now or after the next budget. Please note that property rates quoted in valuation tables for properties in Peshawar and different cities of Sindh have also received similar criticism but no intention of fixing these rates has been expressed by the authorities concerned. Furthermore, the announcement of an amnesty scheme for the property sector is also expected, the expected terms and details of which will be shared in my next article.

Meanwhile, I would like to get your take on the expected correction in the FBR valuation tables for DHA so don’t forget to comment below.

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Current scope of investment in DHA Lahore

dha investment guied

Current scope of investment in DHA Lahore

 
DHA Lahore has always remains the name of trust for overseas and local investors. Investors and end users always get 20 to 30% profit (ROI) return of their investment per anum on their investment. Both long term and short term investments in DHA gave promising rewards in the past. DHA offers investment safety and is one of the most promising avenues of investment across the city. In the current scenario, I would suggest people consider Phase VII/VIII and Prism 9 for investment.
Development work is almost complete in Phase VIII and possession is expected in Jan/Feb 2017. If you compare this phase with Phases V or VI, you will realize that prices in Phase VIII are still at Lower Side.
Prism 9, on the other hand, will be the best phase of DHA Lahore in terms of development, planning and approach. So, this phase is worth considering for investment.
All speculative markets move in cycles, and the real estate market in no exception.
The right approach in the current market environment is to invest in DHA Lahore in emerging phases and locations near ring road. These investment in DHA Lahore will deliver on the promised quality as well as timelines of possession.

Residential Projects has great Scope in DHA Lahore as one of the best quality homes being built in DHA Lahore as compare to all other areas one can find the best styles of elevation and state of the art construction. Modern living at its best and if we compare the current market situation with residential market there is no impact whatsoever as prices are going up day by day due to cost of construction and home hunter (serious buyer’s) are still very much active in home hutting because a home always `remain a basic need for everyone.

How much budget 2016-17 has affect the property sector?

 
Let’s start with comparison of previous and current given rates by the Government and analyze it accordingly.

If we see from the above mentioned table the difference on transfer of one Kanal plot (previous and current rates of DHA Phase I) is Rs.194, 400. Average rise in one kanal Plot in DHA emerging phasee like phase VI/V/VIII is about to 20% to 30% e.g. Average rates of plot in phase VI ,B Block in 2015 December was 18.5 M to 19.5. Now the current price is around 21.1 M to 23.5 M. Rise is almost 15% to 20%. Now considering the rise in price of property the taxes seems to be quiet nominal.

DC Rates

Rise in Dc rates are 20% to 30% from previous ones. Stamp duty and CVT will be calculated on DC Rates

Fair Market Value/FBR Value


Fair market value and FBR value is the same thing and it’s a new price introduced by FBR. It’s a price that is between the actual market value and DC rates so an average rate is decided for that particular area i.e Fair Market Value/FBR Value.
1% CGT for filer and 2% CGT for non-filer will be calculated on FBR value

Advance Tax


2% Advance tax for filer and 4% for non-filer will be calculated on FBR value. Previous values were 1% and 2% respectively.

CGT (Capital Gain Tax)

This is the most important issue in the whole scenario of taxes. Here we have to understand the criteria and how we have to pay the CGT.
Previous CGT 1% for filer 2% for non-filer
Current CGT 1% for filer 4% for non-filer

If a seller sale the property within
One year than CGT is 10%
Two years than CGT is 7.5%
Three years than CGT is 5%
More than three years – NO CGT

CGT is actually calculated on actual gain/actual profit. If we purchased the property (1 Kanal Plot DHA Phase I) this year 2016 and sale out in 2017 (within one year) then it will be calculated as follows:
FBR/Fair Market Value 2016 = 13,440,000/- (1 Kanal)
FBR/Fair Market Value (approx. rate in 2017 decided by FBR) =15,000,000/-(1 Kanal)
FBR value 2016 – FBR Value 2017 =1,560,000/- (Actual Gain)

CGT 10% on first year =1,560,000 x10/100
=156,000
CGT 7.5% on 2nd year
CGT 5% on 3rd year
More then 3 years (exempted)

Now this is specifically for filers when they file there return in FBR they will pay the CGT accordingly that is quiet nominal and evident from the above mentioned calculations.

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