{"id":21785,"date":"2016-07-13T17:53:58","date_gmt":"2016-07-13T12:53:58","guid":{"rendered":"http:\/\/www.zameen.com\/blog\/?p=21785"},"modified":"2017-12-11T12:30:13","modified_gmt":"2017-12-11T07:30:13","slug":"are-instalment-plans-a-blessing-for-buyers-in-times-of-tax-distress","status":"publish","type":"post","link":"https:\/\/www.zameen.com\/news\/are-instalment-plans-a-blessing-for-buyers-in-times-of-tax-distress.html","title":{"rendered":"Are instalment plans a blessing for buyers in times of tax distress?"},"content":{"rendered":"

\"clip-art-meeting-721862\"Instalment plans are indeed a catalyst in the real estate market as investors are given the option to pay for their property in the form of small payments over a period of time as opposed to a lump sum payment. This makes it easier for them to purchase expensive real estate and also reduces the risk of investing a large amount of money at once in a real estate project which is in its initial stages.<\/span><\/p>\n

In light of the current real estate scene and the imposition of excessive real estate taxes, purchasing real estate via instalment plans may offer relief to investors, who are already in a state of turmoil. Although, the purchasers of property on instalments are liable to pay tax, their tax payment may be prolonged compared to investors who purchase a plot in an area which has already granted possession. When times are tough and investors need to squeeze every bit of profit that they can get, instalment plans may prove to be slightly good news for those that wish to prolong tax payments.<\/p>\n

How can investors prolong tax payments by paying through instalment plans? <\/strong><\/p>\n

When investors purchase a plot in an area where possession has already been granted by making a lump sum payment, they may be liable to taxes such as advance tax, capital value tax, and stamp duty. When they sell this plot (within a 5-year period) they are also liable to pay capital gains tax on the difference of the price of the property at purchase and when it is sold. This means that buyers are liable for a number of taxes immediately if they make a lump sum payment for a property in a developed area with possession.<\/p>\n

However, buyers who are paying for property via an instalment plan are liable for no taxes immediately. Buyers begin their investment plan by paying the booking fee\/ down payment and continuing with monthly or quarterly instalments (usually) without paying any additional charges on the spot. Once the project progresses and buyers have paid a number of instalments and are now ready for possession, they may be liable to pay property tax on property they have retained for over a period of two years.<\/p>\n

If they wish to transfer their plot after the granting of possession to a new buyer for their property, then both the new buyer and the current owner will be charged with advance tax. The current owner or seller of the specific property will be charged with capital gains tax\u00a0 (for any property kept for less than a period of five years) when they sell their property to a new owner, but not prior to this. Owners who sell property which has accelerated in value before possession and during the course of their instalment plan, will also be liable for capital gains tax upon selling their property regardless of whether they are selling it in the midst of their instalment plan.<\/p>\n

Hence, investors who purchase property via an instalment plan are likely to be free from tax through the duration of most of their instalments and may only be hit with the tax plague when they opt to sell their property and\/or when they are granted possession of it. Not hearing the word \u201ctax\u201d for a period of 1-3 years while making payments for a particular property is a minor tax relief, a luxury which is not granted to those who purchase plots via a lump sum payment in an area already granting possession.<\/p>\n

What should investors who want to avoid excessive taxes do?<\/strong><\/p>\n

Investors who want to avoid taxes for some time may opt to purchase property via an instalment plan. Not only will it be convenient but investors will not have to worry about any additional charges until most of their instalments are paid. However, investors who must pay instalments over PKR 50,000 may be charged with withholding tax when paying through the bank. Other than that they will be tax-free in the case of their property until most of their instalments are paid, they sell their property, or possession is granted.<\/p>\n

Moreover, investors have the opportunity to gauge a project\u2019s progress and potential while paying instalments to decide whether they want to continue investing money in it or dispose of it. Paying via instalment plans may be slightly more expensive compared to paying the full price of the property on the spot, but in these confusing times it certainly seems to be worth it.<\/p>\n

Do you think purchasing property via instalment plans is a good way to prolong your tax payments? Why or why not? Let me know in the comments below.<\/p>\n

 <\/p>\n","protected":false},"excerpt":{"rendered":"

Instalment plans are indeed a catalyst in the real estate market as investors are given the option to pay for their property in the form of small payments over a period of time as opposed to a lump sum payment. This makes it easier for them to purchase expensive real estate and also reduces the risk of investing a large amount of money at once in a real estate project which is in its initial stages. In light of the current real estate scene and the imposition of excessive real estate taxes, purchasing real estate via instalment plans may offer relief to investors, who are already in a state of turmoil. Although, the purchasers of property on instalments are liable to pay tax, their tax payment may be prolonged compared to investors who purchase a plot in an area which has already granted possession. When times are tough and investors need to squeeze every bit of profit that they can get, instalment plans may prove to be slightly good news for those that wish to prolong tax payments. How can investors prolong tax payments by paying through instalment plans? When investors purchase a plot in an area where possession has…<\/p>\n","protected":false},"author":42,"featured_media":21786,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[],"tags":[3245,33,3009],"persona":[],"class_list":["post-21785","post","type-post","status-publish","format-standard","has-post-thumbnail","tag-instalment-plans","tag-real-estate","tag-taxes"],"acf":[],"yoast_head":"\nAre instalment plans a blessing for buyers in times of tax distress? - Zameen News<\/title>\n<meta name=\"description\" content=\"Instalment plans are indeed a catalyst in the real estate market as investors are given the option to pay for their property in the form of small payments\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.zameen.com\/news\/are-instalment-plans-a-blessing-for-buyers-in-times-of-tax-distress.html\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Are instalment plans a blessing for buyers in times of tax distress? 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