Proposed tax changes raise concerns in real estate sector

Landowners could face a higher tax burden under the proposed 2026-27 fiscal year budget as the government moves to expand the scope of capital gains taxation on real estate transactions conducted through joint development agreements.
Under provisions included in the Finance Bill presented by Finance Minister Amir Khosru Mahmud Chowdhury, a 15% capital gains tax would apply not only to upfront signing money received by landowners but also to the value of apartments and other benefits obtained from developers.
Currently, capital gains tax is imposed only on signing money, while apartments allocated to landowners under joint development agreements remain exempt. The proposed measure seeks to bring these non-cash benefits under the tax net.
The move has sparked concern among landowners and industry stakeholders, who fear it could increase transaction costs, discourage development agreements and ultimately raise housing prices.
Naimul Kabir (pseudonym), a landowner who recently developed a 10-storey building in Jatrabari through a partnership with a developer, said the additional tax burden could encourage tax evasion and weaken confidence in the sector.
Another landowner, Masudul Hoque of Baridhara, said higher tax liabilities may lead some parties to underreport property values, creating greater opportunities for tax evasion.
He also warned that developers are likely to pass the added costs on to buyers, increasing apartment prices and shifting the burden to consumers.
Masudul, who is also the managing director of Mehnoor Properties Ltd, said rising compliance costs could further undermine affordability in an already strained housing market.
Industry leaders echoed similar concerns, arguing that the real estate sector is already facing multiple challenges. Speaking to the Daily Sun, Dr Md Ali Afzal, president of the Real Estate and Housing Association of Bangladesh (REHAB), said apartment and plot sales have declined by nearly 60%, placing the industry under significant pressure.
He noted that construction costs have risen sharply due to global geopolitical tensions and supply chain disruptions, with prices of key materials such as cement and steel increasing by around 31%.
“The sector contributes nearly 14% to the country’s GDP and supports about 50 lakh people directly and indirectly. At this stage, the industry needs policy support rather than additional tax burdens,” he said.
Dr Afzal also expressed concern over another budget proposal that would impose either a 5% capital gains tax or Tk60,000 per katha on land transactions, whichever is higher.
According to him, the measure could disproportionately affect areas outside Dhaka, where land prices remain comparatively low.
REHAB leaders warned that taxing apartments received under joint development agreements could discourage landowners from entering such arrangements, slowing project implementation and reducing housing supply.
Stakeholders further cautioned that any additional costs generated by the proposed measures are likely to be passed along the value chain, resulting in higher apartment prices and further eroding affordability for middle- and lower-income buyers.