The long-anticipated Directorate General Immovable Properties (DG IMP) has finally been announced. DG IMP was announced as a part of the previous government’s bid to formalise and regularise and most importantly, tax real estate. It had been announced in the Finance Act 2018 (Budget 2018-19) and a significant section of the new arrangements were dependent on it – and indirectly on the notification which was to announce the establishment of the directorate. Now the notification for establishment of DG IMP has been issued, so what next for realtors and real estate?
Things we know about Directorate General Immovable Properties
Below are some of the important things we know about Directorate General IMP’s function so far:
- It will be Federal Board of Revenue’s (FBR) specialised agency on all matters relating to real estate and immoveable properties which includes open plots, constructed properties — including residential, commercial and industrial, agricultural lands, housing schemes, societies, towers, chains of luxury apartments, and other related assets.
- It will be responsible for real estate classification in respective jurisdictions.
- It will also deal with service providers such as real estate builders, marketing entities, brokers, architects, consultants, and interior designers, among others.
- The directorate will be responsible for geo-mapping of immovable properties.
- It will be responsible for valuation of immovable properties, including the job of roping in private evaluators, indexing of valuation, and market surveys to update them.
- The directorate will track online marketing of immovable properties.
- DG IMP will also map rented properties of all kinds in major urban centres, industrial estate, zones and other areas.
- DG IMP will also track operations of foreign real estate concerns in Pakistan.
- A real estate metrics will be developed to gauge the health of the real estate sector.
- In Real Estate Investment Trusts (REITs), portfolios will be created of properties whose stock prices are used to determine and analyse industry trends.
- Survey and market analysis of the real estate will be conducted by DG IMP.
- Its job will also include documentation of financing and insurance in real estate.
- Forensic analysis of areas of real estate that are prone to tax evasion particularly the collection of Withholding Tax (WHT) in real estate.
DG IMP will immediately start the Identification of high-end properties on sale and rent through internet and will conduct discreet video surveys of new and upcoming real estate projects.
Implication for real estate
As already mentioned, some of the most impactful changes made to the real estate in Budget 2018-19 will finally begin taking effect. There was a significant amount of confusion about when DC rates and FBR rates will be abolished since the announcement had been made on that but no action had been taken. Now, that can happen.
In the long run at least, as has been increasingly obvious over the past couple of years, we are heading towards greater documentation and formalisation of the overall economy and real estate. This also means that the state of caution in which the real estate has been for the past year in particular will continue for some more time before the new regime becomes established as a norm.
Some of the direct, significant, and perhaps immediate implications will include:
- DC rates and FBR rates will be abolished.
- Declared value will be considered for taxation.
- To discourage undervaluation of property, undervalued property can be bought by the government through DG IMP within six months by paying 100% above the declared price.
- WHT regime will become stricter.
What are your opinions on how the real estate sector is progressing? Do you have any questions about it? You can talk to us in the comments section.