Income tax on rent, worked example, in Hong Kong
Taxation Researcher | October 15, 2018
|Non-resident couple´s rental income1|
|Monthly Rental Income2||1,500||6,000||12,000|
|Annual Rental Income||18,000||72,000||144,000|
|Less: Rates paid by the owners3||(900)||(3,600)||(7,200)|
|= Assessable Value||17,100||68,400||136,800|
|Less: Standard allowance for repairs and outgoings (20%)4||(3,420)||(13,680)||(27,360)|
|= Taxable Income||13,680||54,720||109,440|
|Income Tax 5|
|Annual Income Tax Due||2,052||8,208||16,416|
|Tax Due as % of Gross Income||11.40%||11.40%||11.40%|
Global Property Guide research
1 The property is jointly owned by husband and wife.
2 Exchange rate used: 1.00 US$ = 8.00 HKD
3 Rates agreed to be paid and actually paid by the owner of the property are deductible for property tax purpose. They are charged at a percentage of the rateable value, which is the estimated annual rental value of the property at a designated valuation reference date. The current rates percentage for financial year 2006-2007 is 5%. In this case, the rateable values are assumed to be the same as the annual rental incoem generated by the properties.
4 The Hong Kong Inland Revenue Ordinance stipulates a flat rate of 20% on the assessable value (gross income less rates paid by the owners) as allowance deductible for repairs and outgoing expenses. No other expenses other than the rates paid by the owner,irrecoverable rent, and the 20% standard allowance can be deducted.
5 Property tax is imposed at a flat rate of 15%.