April 2025: In a significant development for Pakistan's real estate market. The government has decided to reduce the Federal Excise Duty (FED) on property transactions. This change is expected to boost the real estate market. It will make it cheaper to purchase and sell properties and increase investor confidence.
Until now, people buying property had to pay the FED as an extra tax:
These taxes added a massive burden on buyers. This also discouraged many from investing in real estate. However, the Federal Board of Revenue (FBR) has now sent a summary to the Cabinet for final approval. This is to remove these charges altogether. Once approved, the change will be applied immediately. As Prime Minister, Shehbaz Sharif has already approved it in principle.
This isn’t just a tax cut—it’s a significant shift in policy that could help the real estate sector bounce back. Over the past year, property prices dropped and deals slowed down because of high taxes and economic uncertainty.
Experts believe that this step will rebuild trust in the market. And also this increased buying activity in major cities such as Lahore, Karachi, Islamabad, and Faisalabad.
Industry experts are calling it a "much-needed relief." According to property consultant Muhammad Ahsan Malik, this decision will help “remove the fear of extra charges” and allow buyers to plan their investments more confidently. Builders, developers, and agents all expect a jump in sales and project launches in the coming months.
Alongside this reform, the government is also developing a National Housing Policy 2025 to address Pakistan’s housing shortage.
Pakistan currently faces a shortfall of nearly 10 million housing units, and this policy, combined with the removal of the FED, is seen as a smart step toward long-term recovery.
The real estate and construction industries are major economic drivers. When these sectors are active, they support more than 40 other industries, including cement, steel, tiles, and furniture. By removing FED, the government is not just helping buyers; it’s giving the entire economy a push forward.
The removal of the FED from property deals is more than just a tax reform—it’s a signal that the government is ready to back real estate and support economic progress. For buyers, sellers, and investors, this is the best time in months to return to the market.
Now, all eyes are on the Cabinet for formal approval—once passed, a new chapter begins for Pakistan’s property sector.
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