24/08/2024
In Pakistan, the capital gain on inherited immovable property is taxable under the Income Tax Ordinance, 2001. Here's a summary:
1. Inheritance: When you inherit immovable property, you don't pay tax on the inheritance itself.
2. Holding period: The holding period for inherited property starts from the date of inheritance.
3. Capital Gain: If you sell the inherited property, you'll be taxed on the capital gain, which is the difference between the sale price and the fair market value (FMV) of the property on the date of inheritance.
4. Fair Market Value (FMV): The FMV is determined by the Federal Board of Revenue (FBR) or a registered valuer.
5. Tax rates: Capital gains tax rates in Pakistan are as follows:
- 10% for holding periods up to 1 year
- 7.5% for holding periods from 1-2 years
- 5% for holding periods from 2-5 years
- 2.5% for holding periods over 5 years
6. Exemptions: Some exemptions apply, such as:
- If the property is sold within 5 years of inheritance, and the gain is reinvested in another immovable property within 6 months.
- If the property is inherited by a spouse, children, or parents.
7. Filing requirements: You must file a tax return and report the capital gain in the tax year in which the property is sold.
