Bhatti Gate, Lahore — Old Walled City Houses Owned by Many Heirs

Inside Bhatti Gate, as across the Walled City, many houses have passed down through three or four generations. Ownership is often split among a dozen or more heirs, some still living in the house, others scattered across Lahore or abroad. Such property is usually recorded in the revenue record rather than a housing society's books — and the tax position of each heir depends on what that record says.

Revenue record and mutation

Older urban property is often recorded through the land revenue system and registered deeds rather than a society transfer. When an owner dies, the property is transferred to heirs through inheritance mutation (intiqal) in the revenue record, showing each heir's share. That mutation is the key document for tax: it establishes who owns what share, from when.

Each heir owns a share

Inheritance itself isn't taxed. But each heir who files should show their share in the wealth statement, and anyone receiving rent from the property should declare their share of it.

Selling one heir's share

Often one heir buys out the others, or one sells their share to a relative. A sale of a share is a property transaction:

• the seller pays advance tax under Section 236C at the applicable rate (lower if on the Active Taxpayer List);
• the buyer pays under 236K;
• the seller's gain is calculated from the value at which they inherited the share.

Registration and mutation of the transfer follow the revenue process.

Valuing an inherited share

For a house in the Walled City, valuing a share can be awkward — the property may be old, partly ruined or occupied by tenants paying very little. A reasonable value at the time of inheritance, documented as well as possible, is what you need. It becomes the cost if that heir later sells.

When the house is sold as a whole

If all heirs agree to sell, each heir is a seller of their share, with their own advance tax and gain. Heirs who are non-filers pay the higher advance tax rate on their share. Getting every heir onto the ATL before the sale can save a lot. See property sales through power of attorney for heirs abroad.

Walled City conservation rules

Many Walled City buildings are also subject to conservation rules. That affects what can be built or changed — and therefore value — but it's a legal matter alongside the tax one. See our Delhi Gate page.

Bhatti Gate — questions we get asked