The federal government has outlined proposals for major tax cuts on property transactions in the upcoming Budget 2026-27 in an effort to encourage investment in the real estate and construction industry and stimulate economic activity.
The proposed budget includes a slashed tax rate for people filing tax returns on immovable property from the current 1.5 per cent to 0.25 per cent, according to sources. Likewise, the government is mulling a reduction in rate of tax on property sale from 4.5 per cent to 1.5 per cent.
The government hopes the steps will help to spark housing transactions and boost the construction industry, as well as inject some life into the faltering housing market, sources said.
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Talks are still ongoing with the International Monetary Fund regarding the proposals. Sources indicate that the IMF has raised concerns about the proposed tax cuts, due to their possible effect on government revenues.
The lower tax rate would draw more investment into the property sector, which would generate more transactions and thereby more overall tax revenue, say the government officials. They also believe that a resurgence of the building sector would generate some jobs and be advantageous for different constituencies of the economy.
Sources added that the final shape of the proposals will depend on ongoing negotiations with the IMF and approval from the federal cabinet before their inclusion in the upcoming federal budget.
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