CGT on Property: The Core Idea
CGT is calculated on profit, not the full selling price.
236C is advance tax at transfer; CGT is final gain calculation in the return.
Purchase deed, sale deed, transfer documents, and challans are essential.
Capital Gain = Sale Consideration − Allowable Cost
Allowable cost starts with the supported acquisition cost and may include amounts permitted by the applicable law, such as documented acquisition or transfer costs and qualifying capital improvements. Keep deeds, allotment papers, payment evidence, invoices and valuation support. Unsupported or personal costs should not be assumed deductible.
CGT vs Section 236C Advance Tax
| Item | Capital Gains Tax | Section 236C Advance Tax |
|---|---|---|
| Basis | Profit or taxable gain | Gross sale consideration |
| Timing | Calculated in the annual return | Collected at transfer or registration |
| Purpose | Tax on the property gain | Advance income tax on the sale transaction |
| Calculator | Property CGT calculator | Property-sale tax calculator |
Why the Property Acquisition Date Changes CGT
The current immovable-property schedule separates property acquired on or before 30 June 2024 from property acquired on or after 1 July 2024. Older property retains the holding-period table. Newer property does not receive the declining holding-period rates.
| Holding Period | Open Plot | Constructed Property | Flat |
|---|---|---|---|
| Up to 1 year | 15% | 15% | 15% |
| Over 1 to 2 years | 12.5% | 10% | 7.5% |
| Over 2 to 3 years | 10% | 7.5% | 0% |
| Over 3 to 4 years | 7.5% | 5% | — |
| Over 4 to 5 years | 5% | 0% | — |
| Over 5 to 6 years | 2.5% | — | — |
| Over 6 years | 0% | — | — |
Inherited and Gifted Property: Cost-Basis Records
Finance Act 2026 includes a property-specific clarification for inherited immovable property. For a later sale, the beneficiary's cost is the fair market value when the property is transferred to the beneficiary. This can materially affect the gain calculation.
A gift, bequest, succession, inheritance or family transfer should not be treated as having no cost without reviewing Section 37 and the transfer documents. The valuation date, ownership history and supporting evidence can determine the cost used on a later disposal.
Records to Keep for Property CGT
- Original purchase deed or allotment letter.
- Sale deed or transfer documents.
- Proof of payments received and paid.
- Section 236C challan from the transfer process.
- FBR valuation support, if used for the transaction.
- Inheritance or gift documents where relevant.
Example: How Property CGT Is Thought Through
Suppose a property was bought for Rs. 8,000,000 and later sold for Rs. 11,000,000. The starting point for CGT is the gain, not the full sale price. In this simplified example, the gross gain is Rs. 3,000,000 before considering allowable cost rules, holding period, exemptions, or any special treatment under the applicable law.
| Item | Amount | Why It Matters |
|---|---|---|
| Purchase cost | Rs. 8,000,000 | Base cost support is needed. |
| Sale consideration | Rs. 11,000,000 | Sale documents and receipts should match. |
| Gross gain | Rs. 3,000,000 | Starting point before legal adjustments. |
| 236C advance tax | Claim separately | Advance tax paid at transfer may be adjustable in the return. |
How to Declare Property Sale in IRIS
- Open your annual income tax return in FBR IRIS.
- Enter sale details in the capital gains / property disposal section.
- Enter purchase cost, sale consideration, and dates.
- Claim advance tax paid under Section 236C where available.
- Update your wealth statement to remove the sold asset and show sale proceeds.
Common CGT Mistakes Property Sellers Make
The most common mistake is treating the tax collected at transfer as the full and final answer. Section 236C is collected on the sale value, while CGT looks at the gain. A seller can therefore have both a transfer challan and a separate gain calculation in the annual return.
- Using the sale price as the gain instead of deducting supported cost.
- Losing the original purchase deed or allotment letter.
- Forgetting to update the wealth statement after disposal.
- Not matching bank deposits with sale proceeds.
- Assuming inherited property has no record requirement.
If the property was improved, rebuilt, inherited, or transferred within family before sale, do not rely on a rough profit estimate. Review the legal documents and payment evidence first, because the support for cost and ownership history can affect the final position.
Final Property Tax Verification Checklist
Before a property transfer, separate the federal tax calculation from the provincial and local charges. Federal items usually include 236K, 236C, CGT, and return-filing treatment. Provincial or local items can include stamp duty, mutation fee, registration fee, society transfer charges, and annual property tax. Mixing them together can make the deal look cheaper than it really is.
Keep the sale agreement, transfer deed, payment proof, FBR challans, valuation basis, CNIC/NTN details, and authority receipts in one file. These documents are useful when filing the annual return, updating the wealth statement, claiming advance tax, or explaining the source of funds.
Related Property Guides
Official CGT Sources
When to Ask for Professional Review
Get a professional review before transfer if the property is jointly owned, inherited, gifted, mortgaged, under litigation, held by a company, transferred through a society, or paid through multiple bank accounts. These facts can change the documents required and the way the transaction is reported in the annual income tax return.
Also review the file if the declared value, FBR value, provincial value, and actual payment amount are different. A clear explanation before filing is much easier than fixing a mismatch after a notice or audit query.
Final Practical Reminder
Use this guide for planning, then confirm the final amount, status, or filing treatment from the document that controls your case. In tax work, the safest result is the one supported by a challan, certificate, portal record, signed document, bank trail, or official notification.