Govt proposes property tax cuts to spur housing sector growth 

ISLAMABAD: Pakistan’s federal government has proposed tax cuts in the 2025–26 budget to breathe life into the construction and real estate sectors, which have been struggling in recent years.

One of the key measures includes a reduction in withholding tax on property purchases. The government plans to lower the tax across different transaction tiers, from 4 per cent to 2.5 per cent, 3.5 per cent to 2 per cent, and 3 per cent to 1.5 per cent, depending on the value of the deal.

The budget also seeks to scrap federal excise duty of up to 7 per cent on the sale and transfer of commercial properties, plots, and houses. This move is expected to reduce transaction costs and encourage more activity in the formal property market.

To help lower and middle income buyers, a new tax credit will be offered for those purchasing homes up to ten marlas or flats under 2,000 square feet.

The government also plans to roll out a structured mortgage financing system to make housing loans more accessible and affordable ,especially for first-time buyers.

In Islamabad, the stamp duty on property transactions is expected to be cut from 4 per cent to 1 per cent, making it easier for residents of the capital to buy homes.

Federal officials have urged provincial governments to follow suit by reducing their own taxes on property transfers, in hopes of triggering a broader revival in the housing market nationwide.

The construction industry, which directly supports dozens of allied sectors, is seen as critical to Pakistan’s wider economic recovery. The government hopes that these measures will help unlock new investment and generate jobs. 

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