Budget 2026-27: real estate sector seeks tax reforms to spur investment

Stakeholders in the real estate sector have urged the government to introduce tax reforms as well as rationalise taxes to attract both local and foreign investment and boost construction activities across the country.

They pointed out that the ongoing military conflict in the Middle East has created an opportunity for real estate investors, including resident and overseas Pakistanis, to park their savings in housing societies across major cities of Pakistan.

“The government should expedite digitisation of land records in major cities, ensure swift property transactions through a transparent and computerised system, and establish an authority or vigilance mechanism to protect property owners from land grabbers and other criminal elements,” said Ibrahim Amin, Chairman of TriStar International, a real estate valuation company.

Also read: real estate sector: Big cuts in transaction taxes likely

He further suggested that the government introduce a one-window digital property tax system under which all federal, provincial, development authority, and municipal property-related taxes are accessible through a single digital portal, aiming to establish a system that would reduce confusion, improve compliance, and support documentation.

Amin also recommended greater incentives for overseas Pakistanis through simplified tax treatment, lower withholding tax rates, and faster registration processes to attract remittances into the real estate sector through formal channels.

He appreciated the government’s initiative to launch a subsidised markup scheme through banks for the purchase, construction, and renovation of residential units, adding that the scheme would revitalise construction activities and generate employment opportunities in multiple allied sectors.

“The government should move from a high-tax model to a high-documentation model. Lower transaction taxes, simplified regulations, and digital verification mechanisms will increase formal economic activity, improve revenue collection over time, and restore confidence in the real estate and construction sectors,” he said.

Amin further stated that the abolition of tax on multiple properties should be made permanent to restore investor confidence.

Taxing deemed income on property discourages documented ownership and creates hardships for genuine property owners, including overseas Pakistanis, retirees, and family-owned asset holders, according to him.

Mohammad Hassan Bakshi, Chairman of ABAD (Association of Builders and Developers), said the government should introduce comprehensive tax reforms to revive construction activities in the country.

He suggested reducing the tax under Section 236K on the purchase of immovable property to encourage formal transactions.

“Since the rate has already been reduced from 4% to 1.5%, the next step should be to lower it to 0.25% for filers for all property purchasers.”

ABAD chairman said the withholding tax under Section 236C should also be reduced in the next budget to improve market liquidity.

“Builders and developers shall be exempted from paying tax under section 236 C as they are already paying taxes as business income therefore capital gain is double taxation. High transaction cost discourages genuine transactions.

“The objective should be to tax actual gains or income rather than discourage investment in documented property,” Bakshi said.

He added that the announced commercialisation policy should be supported through lower conversion charges, digitalised approval procedures both front end and back end.

“Such measures can unlock economic activity, create jobs, and increase revenue collection.”

Bakshi further emphasised that the government should continue monitoring the progress of the Wazir-e-Azam Apna Ghar Scheme and introduce reforms that enable end-users to easily access housing finance from banks.

“In addition, financing scheme shall be made available for builders and developers to facilitate the rapid development of housing projects across the country,” he said.