Islamabad, August 3, 2025 – The Federal Board of Revenue (FBR) has outlined conditions for availing tax exemption of sale of immovable property.
The FBR issued Income Tax Circular No. 1 of 2025-25 to explain major changes brought through Finance Act, 2025 to amend provisions of Income Tax Ordinance, 2001.
According to the FBR, capital gain on immoveable property acquired on or before 30th day of June, 2024 is charge to tax at slab rates ranging from 15% to 0% depending upon the holding period.
In case of an immoveable property being an open plot, the tax on capital gains after the holding period of six years become 0%. Similar in the case of constructed property on which capital gain is chargeable to tax at the rate of 0% after the holding period of four years.
The FBR added that for simplicity of a person whose income from disposal of immoveable property is chargeable at the rate of 0%, exemption provision has been introduced through Finance Act, 2025 in section 159 of Income Tax Ordinance, 2001 whereby such person may apply for exemption certificate on account of advance tax on sale or transfer of immoveable property subject to the following conditions and to the fact that such immovable property giving rise to tax free capital gains:
(a) has been in the personal use for the last fifteen years;
(b) has been declared by the person in his wealth statement under section 116 for the last fifteen years; and
(c) appears as residence for personal use in tax record of the person.
Moreover, under the situations specified regarding above immoveable property, the super tax under section 4C of the Ordinance will also not be payable by the seller or transferee on capital gains arising from disposal of such specified residential immovable property.
The exemption certificate for any person under this section read with section 236C and waiver from section 4C will be issued or applied once every fifteen years, the FBR added.