Punjab Pakistan: Why should I pay property tax arrears of a previous owner?

Why should I pay property tax arrears of a previous owner?

I have just purchased a house, and the Excise and Taxation Department is pressing me hard for payment of the past several years' property tax. Am I liable for payment of such arrears?

A similar question arises when a new owner receives a notice of property tax demand issued in the name of the previous owner and assumes that the tax liability is of the previous owner, not the new owner.

The law does not support the new owner's assumption. The property tax is on the annual value of a property and as such is attached to the property itself, not to the owner of the property. Hence, on transfer of ownership the property tax liability is transferred to the new owner of the property. The new owner is now liable to pay the property tax on the property.

The new owner has the right to sue the previous owner if the previous owner did not tell him about the property tax liability existing at the time of purchase of the property. However, the government or the Excise and Taxation Department is not a party to the contract of sale. Moreover, nothing in the sale deed can override the law, namely, the Urban Immovable Property Tax Act of 1958.

In addition to the above, Rule 12 of the Property Tax Rules places several responsibilities on an owner. Under this rule, the owner of a property shall within a period of one month from the date of occurrence of any transfer, demolition, destruction or addition, report to the assessing authority of the rating area:

• all transfers thereof by sale, gift, exchange or perpetual lease;
• any increase in rent subsequent to the date on which the value of such property was last assessed;
• the demolition or destruction of the property or any portion thereof; and
• any substantial addition to the property whether or not such addition has occasioned an increase in rent.