Nepal real estate revenue hits three-year high as buyers rush before tax hike

Nepal's real estate sector saw its highest revenue in three years, collecting 60.74 billion Nepalese rupees in fiscal year 2025-26. This surge occurred as buyers and sellers hurried to finalize deals before new tax increases and land subdivision restrictions were implemented.

The Department of Land Management and Archives reported that revenue significantly surpassed the 42.42 billion rupees collected in 2023-24 and 41.16 billion in 2022-23. The final month of the fiscal year, from mid-June to mid-July, was particularly active, generating 11.95 billion rupees, the highest monthly collection. This contrasts sharply with the lowest collection of 2.75 billion rupees recorded from mid-October to mid-November.

Real estate professionals attribute the increased activity to upcoming changes in capital gains tax and the restoration of land subdivision limitations. The government increased the capital gains tax on real estate sales in the budget for 2026-27. Profits from properties held for five years or more now face a 7.5 percent tax, up from 5 percent, while profits from properties held for less than five years are taxed at 10 percent, an increase from 7.5 percent. These new rates became effective on July 17.

Bhesh Raj Lohani, former president of the Nepal Land and Housing Developers’ Federation, stated that many individuals accelerated their transactions to avoid the higher capital gains tax and to complete deals before land subdivision restrictions were reinstated. He noted that transactions significantly increased in the final month due to these concerns. The government's struggle to complete land classification across its 753 local governments, with only 340 having finished the process by late June, has also contributed to the halt in land subdivision in many areas.

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Transactions increased significantly in the final month because people wanted to avoid the higher capital gains tax and complete deals before land subdivision restrictions were restored.