Capital Gain Tax (CGT) is the tax you pay on the profit earned when you sell immovable property such as a plot, house, or apartment. In Pakistan, Capital Gains Tax treatment can vary based on when you acquired the property, how long you held it, and whether you are on the Active Taxpayers List (ATL). A key investor insight is that, under the older holding-period regime, apartments often reached lower (or even zero) CGT sooner than open plots, which could make apartments comparatively more tax-efficient than land in many medium-term exit scenarios.
The big change after July 1, 2024 (Finance Act reforms)
For properties acquired on or after July 1, 2024, the CGT regime was changed so that holding period relief is no longer the main concept instead, a flat 15% CGT applies for persons appearing on ATL on the date of disposal, regardless of how long the property was held. For persons not appearing on ATL, progressive rates apply (with a stated minimum level in certain cases).
For properties acquired before July 1, 2024, the older holding-period based schedule continues to matter, which is where plot-vs-apartment differences were historically more noticeable for many investors planning a resale.
Why apartments can “feel” much lighter on capital gains tax than land
In practical investor terms, apartments can appear “lighter taxed” because the older Capital Gains Tax approach was built around holding periods and property categories, and apartments in many cases moved down the CGT scale faster than open plots. This is one reason many investors prefer vertical developments for a medium-term investment horizon because the exit can be easier not only operationally (sale/rent), but sometimes also from a tax-friction perspective, depending on acquisition date and filer status.
Lahore valuation context: Mouza Chung (Chung Punjgrain) example
Investors also compare “land value” versus “structure value” using published valuation tables (used in documentation/tax contexts). In the valuation table listing Allama Iqbal Town Chung Punjgrain, an example set of figures shown is PKR 695,600 per marla (residential open plot) and PKR 2,000 per sq ft (residential super-structure).
Using your Lahore convention of 1 marla = 225 sq ft, the open-plot valuation converts to approximately PKR 3,092 per sq ft (695,600 ÷ 225). This illustrates the point you raised: in many areas, land can be valued higher per sq ft than built-up/covered area, while apartments can still offer strong investor upside through rental yield + market appreciation often with cleaner exit dynamics than open land, depending on the investor’s horizon.
A nearby investment note: Mayfair Residencia by Sheranwala Developers
Interestingly, in the same broader Canal Road Lahore belt, Sheranwala Developers is delivering Mayfair Residencia an LDA-approved apartment project positioned for investors seeking strong capital gains and ROI through a serviced-apartment/extended-stay model. Sheranwala Developers has also announced Hawthorn Suites by Wyndham as an upcoming hospitality project under its Wyndham portfolio. For details, please give us a call at 03-111-228-228.
Quick practical takeaway
If you’re buying today, your acquisition date matters. For post July 1, 2024 acquisitions, ATL status and the 15% regime become central to Capital Gains Tax planning. For pre July 1, 2024 acquisitions, the older holding-period framework can still shape outcomes where many investors observed apartments being comparatively less punishing than land on resale.
Disclaimer
This article is for general awareness only and does not constitute tax advice. CGT outcomes can vary based on facts, documentation, filer status, and subsequent legal amendments. Please consult a qualified tax advisor for your specific transaction.
FAQ
Plot or apartment, what’s better?
Apartment is usually better for rental income and easier resale, while a plot suits long-term upside and higher risk.
Which gives better rent?
Apartments generally give better and more predictable rental returns than plots.
Which sells faster?
Apartments typically sell faster because of smaller ticket size and more buyers.
What reduces risk in an apartment investment?
A strong developer and professional operations reduce risk; for example, Sheranwala’s franchise-led hospitality model under Hawthorn Suites by Wyndham and Ramada Encore by Wyndham supports structured management standards.
Which is better for capital gains?
Plots can deliver bigger jumps in growth phases, while apartments can still appreciate well with a smoother exit.