Bangladesh’s housing sector has long been one of the key pillars of the national economy. Beyond providing shelter, the real estate industry drives economic activity across more than two hundred related sectors, including construction, cement, steel, ceramics, electrical products, furniture, banking, insurance, and transportation. As urbanization accelerates and demand for housing continues to grow, the sector has become increasingly important in supporting employment, investment, and economic development.
Against this backdrop, the proposed Fiscal Year 2026–27 budget has introduced a significant policy change that has generated considerable discussion among stakeholders. The proposal seeks to impose a 15 percent Capital Gains Tax on the value of flats and other benefits received by landowners under Joint Development Agreements (JDAs).
The Joint Development Agreement model is the foundation of most residential developments in Bangladesh. Under this arrangement, landowners contribute land while developers undertake design, approvals, financing, construction, marketing, and project execution. Upon completion, both parties receive their agreed share of apartments or saleable units. This model has played a vital role in transforming urban land into modern residential communities and has been widely adopted across Dhaka, Chattogram, and other major cities.
Under the proposed tax framework, the value of flats or other benefits received by a landowner from a developer will be assessed based on government-determined property values. After deducting the original acquisition cost of the land, the remaining amount will be treated as capital gain and subjected to a 15 percent tax.
From a policy perspective, the rationale is understandable. Land values in Bangladesh have appreciated substantially over the years, creating significant wealth for many property owners. Governments around the world often tax capital gains as part of broader efforts to increase revenue and ensure equitable taxation of wealth generated through asset appreciation.
However, concerns arise when the proposal is examined from a practical standpoint.
The housing sector is already facing considerable pressure. Construction costs have risen sharply due to increases in the prices of steel, cement, electrical equipment, elevators, generators, and other building materials. Financing costs have also increased as bank lending rates remain high. At the same time, many middle-income families are struggling with declining purchasing power, making homeownership increasingly difficult.
In such circumstances, the introduction of a new tax burden on landowners may have unintended consequences. Landowners may seek additional apartments or greater financial compensation from developers to offset future tax liabilities. Developers, in turn, may need to adjust project costs, and a portion of those additional expenses could ultimately be transferred to apartment buyers.
As a result, housing prices may rise further in a market that is already facing affordability challenges.
A practical example illustrates the potential impact.
Suppose a landowner purchased 10 kathas of land in Dhaka in the year 2000 for BDT 5 million. At the time of purchase, the owner paid all applicable registration fees, stamp duties, and government taxes. Years later, the landowner enters into a Joint Development Agreement and receives ten apartments as his share of the completed project.
If each apartment is valued at BDT 5 million according to the government-assessed value, the total value received would be BDT 50 million. After deducting the original land acquisition cost of BDT 5 million, the taxable capital gain would be BDT 45 million. Applying a 15 percent Capital Gains Tax would result in a tax liability of approximately BDT 6.75 million.
The central issue is that the landowner may not receive any cash payment at this stage. Instead, one asset has effectively been exchanged for another. Many stakeholders therefore question whether taxation should occur before the apartments are sold and actual cash gains are realized.
The implications may extend beyond landowners and developers. Consider a medium-sized project where additional tax-related costs amount to BDT 7 million. If the project contains 20,000 square feet of saleable area, the added cost would translate to approximately BDT 350 per square foot. For a 1,500-square-foot apartment, this could increase the final purchase price by more than BDT 500,000.
Ultimately, the burden may fall on homebuyers.
At the same time, it is important to acknowledge the government’s legitimate need to expand revenue collection. Public investments in infrastructure, healthcare, education, and social services require sustainable sources of funding. Tax reforms and expansion of the tax base are therefore necessary components of economic development.
The challenge lies in balancing revenue generation with the sustainable growth of the housing sector.
Potential alternatives could include collecting tax at the time of apartment sale rather than upon receipt, providing exemptions for inherited properties, introducing thresholds for small landowners, or adopting a phased implementation approach that minimizes market disruption.
Bangladesh is expected to experience significant urban growth over the coming decades. Demand for housing will continue to rise as more people migrate to cities and seek better living standards. In this context, housing policies should encourage planned urban development, private investment, and affordable housing solutions.
The proposed 15 percent Capital Gains Tax is therefore more than a fiscal measure; it is a policy decision that could influence the future trajectory of Bangladesh’s housing sector. A balanced approach that considers the perspectives of government, developers, landowners, economists, and homebuyers will be essential to ensuring both sustainable revenue collection and continued growth of the housing industry.
A strong housing sector contributes far beyond the construction of buildings. It creates employment, stimulates industrial production, attracts investment, supports urban development, and strengthens the broader economy. Any policy affecting this sector should therefore be evaluated not only through the lens of taxation but also through its long-term impact on economic growth and social development.
Tabassum Imam
Vice President
Real Estate Professionals Forum
