Talks between Pakistan and the International Monetary Fund (IMF) over proposed tax relief for the real estate sector remain inconclusive, with both sides yet to reach agreement on changes to property transaction taxes, according to sources familiar with the negotiations.

The discussions are part of ongoing budget finalisation for 2026–27, where the government is seeking targeted tax cuts, while the IMF continues to prioritize revenue stability and fiscal targets.

At the centre of the negotiations are proposed reductions in withholding tax on property transactions. The government has suggested cutting the withholding tax on property purchases by filers from 1.5 percent to 0.25 percent, and reducing the tax on property sales by filers from 4.5 percent to 1.5 percent.

However, sources said the IMF has raised concerns over the potential revenue loss from these reductions, and no consensus has yet been reached.

The proposed relief is aimed at reviving Pakistan’s struggling real estate and construction sectors, which have faced prolonged slowdown due to high transaction costs, elevated construction expenses, and broader economic uncertainty. Policymakers argue that lower taxes could help restore activity in the property market and encourage investment, including from overseas Pakistanis.

The Federal Board of Revenue (FBR) has also briefed parliamentary committees that negotiations with the IMF are ongoing over adjustments to Sections 236C and 236K of the Income Tax Ordinance, which govern taxation on property purchases and sales.

The real estate sector, which has strong linkages with industries such as cement, steel, and construction materials, is considered a key driver of broader economic activity. Its continued slowdown has had ripple effects across multiple sectors, making its revival a policy priority.

While the government has reportedly secured IMF approval for withdrawing proposed tax hikes on items like solar panels and stationery, the real estate tax package remains one of the major unresolved points in the current budget negotiations.