Capital Gains Tax on Property: What Changed in 2025-26
If you've been sitting on a property for a few years waiting out the capital gains tax exemption clock, the Finance Act 2025 just moved that finish line significantly closer — a change that's worth understanding whether you're planning to sell soon or just started your holding period.
The old rule vs the new rule
Previously, immovable property in Pakistan needed to be held for seven years before capital gains tax dropped to zero, with a gradually declining rate structure across those years. Under the Finance Act 2025, that full exemption threshold has been reduced to four years, meaningfully shortening the holding period investors and homeowners need to wait through before a sale becomes entirely CGT-free.
The current rate structure
- Held less than 1 year — 15%
- Held 1 to 2 years — 12.5%
- Held 2 to 3 years — 10%
- Held 3 to 4 years — 5%
- Held 4 years or more — 0% (fully exempt)
This is a meaningfully steeper decline than the old seven-year schedule, front-loading the rate reduction into fewer years. Use our capital gains tax calculator to see exactly what you'd owe based on your specific holding period and gain.
What counts as your holding period
Your holding period is generally calculated from the date of acquisition (as reflected in your registered sale deed or transfer documents) to the date of disposal. Gifted or inherited property has its own specific rules for how the holding period is calculated, which can differ from a straightforward purchase-to-sale timeline — worth confirming with a tax practitioner if your property came to you other than by direct purchase.
Why this change matters for sellers now
If you purchased property between four and seven years ago under the old rules, you may now find yourself in the fully exempt bracket sooner than you originally planned for — worth reassessing your sale timing if CGT was a factor in your decision to hold longer.
It's calculated on gain, not sale price
Capital gains tax applies to your actual gain — sale price minus your documented cost of acquisition and eligible improvement costs — not the full sale price of the property. Keeping proper documentation of your original purchase price, transfer costs, and any documented improvements matters directly to reducing your taxable gain.
Check FBR for the latest confirmation
Property tax rules have shifted with nearly every recent Finance Act. Before making a sale decision based on holding period, confirm the current year's rates directly through FBR's official notifications, since further adjustments in future budgets are common in this area.
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