Property-Related Taxes in Hong Kong
Hong Kong applies a territorial source principle, meaning only income derived from Hong Kong is taxable. Foreign-sourced income is not subject to tax. Married couples are taxed separately unless they elect for joint assessment.
Rental income is subject to property tax at a flat rate of 15% on net assessable value, rather than income tax. Hong Kong does not levy capital gains tax. Property transaction costs are high by international standards, with roundtrip costs typically ranging from 10% to 14%.
Annual Property Tax
Income derived from renting out property located in Hong Kong is subject to property tax. Property tax is levied at a standard rate of 15% on the property’s net assessable value (NAV).
The NAV is calculated by deducting certain allowances from the gross rent, regardless of whether the expenses were actually incurred.
Property Tax Calculation
| Description | Calculation |
| [A] | Gross Rent |
| [B] Less: | Irrecoverable Rent |
| [C] | Assessable Value (A-B) |
| [D] Less: | Rates paid by owner(s) |
| [E] | (C-D) |
| [F] Less: | Statutory allowance for repairs and outgoings (E x 20%) |
| Net Assessable Value (E-F) | |
| Source: Gov.hk |
Property owners are required to maintain proper records of rental income, including lease agreements, rent receipts, records of rates paid, and correspondence relating to lease changes and rent recovery, for a minimum of seven years.
Income Tax
Taxable income in Hong Kong is categorized by income type, with different taxes applying depending on the nature of the income. When an individual rents out property, the income is subject to property tax rather than salaries tax or profits tax.
Progressive Tax Rates (Salaries / Personal Income)
| Taxable Income (HKD) | Tax Rate (%) |
| Up to HKD 50,000 (US$6,434) | 2% |
| HKD 50,000 to HKD 100,000 (US$12,869) | 6% |
| HKD 100,000 to HKD 150,000 (US$19,303) | 10% |
| HKD 150,000 to HKD 200,000 (US$25,738) | 14% |
| Over HKD 200,000 (US$25,738) | 17% |
| Source: Global Property Guide, PWC | |
Capital Gains Tax
Hong Kong does not impose capital gains tax. Gains arising from the sale of real estate are therefore not taxable, provided the transaction is not deemed to constitute trading activity.
Property Buying and Selling Costs in Hong Kong
| Cost/Tax Type | Percentage of Sale Price | Who Pays? |
| Property Transfer Tax | 7.50% - 10.40% | buyer |
| Legal Fees | 1.00% | buyer |
| Notary Fees | 0.50% - 1.00% | buyer |
| Real Estate Agent Fee | 0.50% - 1.00% 0.50% - 1.00% |
buyer seller |
| Costs Paid By Buyer | 9.50% - 13.40% | |
| Costs Paid By Seller | 0.50% - 1.00% | |
| Roundtrip Transaction Costs | 10.00% - 14.40% | |
| Source: Global Property Guide, PWC, Deloitte | ||
