Query - fbr residential land valuation vs actual property prices

Dear forum experts,

I am an overseas pakistani looking to purchase a property in islamabad. I am trying to understand the correlation between the 'fbr valuation of immovable residential properties' pricing per square yard, and the actual market value of properties in islamabad. For example, fbr values 1 square yard of residential property in d12 at 53295pkr, so i inferred 1 kanal property value in d12 should be around 2.66cr. However, actual list pricing of property for sale are 40%+ higher than this? Should i consider the actual value of a property to be as stated by fbr land valuation table? Any advice would be most appreciated.
Kind regards
Assid

FBR valuation (dated Jul 2019) is minimal base price as a benchmark for applicable taxes (CGT etc.) at the time of buying/selling.

-- You will have to pay tax based on FBR valuation if you are buying and selling. In case of D-12 that tax collected by CDA at the time of transfer.

-- You will have to pay whatever Market value to the seller.

In almost all cases there is a mismatch between FBR valuation and Market Value.

Assid,

In addition to what Imtiaz wrote, please note that CDA requires sales deed to be filed at the time of transfer. So, any under or over-reporting of prices is less likely.

Since, you'll bring money from outside (foreign remittance), plz make sure it is through banking channel and follow proper procedure to avoid higher taxes imposed on non-filers.

Finally, to all oversees Pakistanis, dollar is under pressure globally and expected to go further down. So weigh your options and make a move to invest in Pakistan. You will not loose on exchange rate as you did a couple of years ago, IA.

Thanks Isloo for adding useful pointer. Just to add

Yes, Sales Deed needed (at-least a procedural formality) but as a normal practice (right or wrong reasons), the sale value is officially shown as undervalued on-par with FBR rate and additional payment is made out of that deed between buyer and seller.

That additional payment can be covered via an stamp paper with whatever payment instrument like Pay-Order etc. Number and Name mentioned on that.

Thank you both, for this invaluable information.

Please could you point me towards a step by step guide, which explains how to buy a property in an area controlled by CDA? I need to get clarity on all the additional costs that I will incur in the house buying process. I am also assuming that the process to buy a house in a housing association such as Bahria enclave will have a slightly different sequence of steps in the buying process.

I would appreciate any help you can offer.

Kind regards

Assid

While buying home, you have to pay CVT, stamp duty and advance tax (or withholding tax) and transfer fees to CDA. On top of it, you pay approx 1% commission to the dealer. (I am not sure if stamp duty is applicable in CDA areas).

Tax rates are applicable to "DC Value". So you need to dig deeper than to use actual purchase price as the basis of calculation. The best is to ask the dealer to give you updated taxes and fees details.

Only sellers pay Capital Gain Tax (CGT) if they sell property within 4 years of buying. So this does not apply to you, unless you are buying for short term investment.

For full details on taxes, please read this blog:

https://www.zameen.com/blog/everything-you-need-to-know-about-taxes-on-property-in-pakistan.html

For CDA rules, please visit this page:

http://www.cda.gov.pk/resource_center/procedures.asp#proc8:

Isloo have summed up the taxes and other relevant stuff.

I will just try to list, all possible steps, that I can recall from a recent personal experience:

-- Assuming that Plot selected and Deal Closed (in RWP/ISB its 1% commission is fixed to be paid by each side). 

-- The seller must obtain the NDC (No Demand Certificate) as a document from CDA to formally indicate that no amount or liability pending and plot is ready to transfer. You must also check this NDC thing as the seller is bound to provide buyer or seller can authorise buyer to obtain it on his/her behalf from CDA.

-- Seller submits Transfer Letter, CNIC, NDC etc. to CDA directorate and CDA allocates a Date for Transfer.

--Buyer must pay CDA transfer fee per valuation rate (Pay Order Number and Amount gets mentioned on CDA transfer letter) before initiating the transfer process.

-- Seller Pays some tax via National Bank and being Filer reduces that to almost half.

-- Both buyer and seller attend the transfer office, testify their consent in front of witness officer and photographs taken as a visual proof of presence in addition to thumbs etc.Transfer process completed and CDA is bound to send letter to your Address

** You pay transfer fee/taxes for the plot, doesn't matter if you have single storey or double story or whatever constructed on top of that. Make sure in case of house the Design (Nakshaa) approved from CDA.

** If a Female buys or sells, for whatever reasons outdated or necessary, she have to have a Male Guardian (Husband, Son, Brother, Father) to accompany her at the time of selling/purchasing!

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The bit that no agent will tell:

Do make sure of its status with the CDA directorate. Most recently they identified a total of 06 plots with their numbers having some litigation issues and their transfers were withheld, even after buyer paid transfer fee and completed his part of transfer procedure, primarily in I-14, I-12. Just double check to be on safer side.

Thank you Imtiaz and Isloo1 for your clear and fact based advice. I appreciate this greatly.I did anticipate that there are many variables to consider, so will continue, but will tread carefully.

Thanks Again!

All the best, good to make a secure deal but once you are happy go ahead with that!!

At times, overthinking makes matter seem overly complex than they actually are ...

Hope you find the best deal and secure what you seek!

I have to echo what the top comment said here. You have to take that all into account because that will be a hard thing to fight especially with how tax is handled nowadays. I hope you have a hassle-free time in this endeavor.

Please confirm n CDA land is in permanent ownership of purchaser unlike Bahria town which only gives Qabza of a plot?

CDA, DHA, RDA etc. are respective authorities ('A') of their domain/area. Their transfer letter is a legal document (per land records) indicating that the land has been transferred to your name as an owner. Unless there are specific conditions explicitly mentioned like leased etc. for specific time but that's pretty much a different document and procedure.

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The way land acquired by BT, I will not be surprised if bigger chunks have no documents or records in the respective revenue/land record offices ...

Thank you Imtiaz sb

You are welcome Ammar sb!

Dear Sir

Market rate is the actual price on which you can buy a property/ plot etc

FBR value is the value on which FBR will collect the Withholding Tax accrding to Income tax ordinance Adjustable tax regime.

CVT stands for the capital value tax on which a buyer need to pay stamp duty according to federal or provincial DC rates.

CGT is the capital gain tax that will be paid by the seller at the time of sale. its value is calculated on the base of gains made from that property.

Regards

Humyyun Iftikhar Raja.