Guide to Property Taxes in Hong Kong

Taxation in Hong Kong is based on the territorial source principle, meaning that only income earned within Hong Kong is taxed. Income derived from outside Hong Kong is not subject to Hong Kong tax. Married couples are assessed and taxed separately unless they elect for joint taxation.

The tax year in Hong Kong starts on April 1 and ends on March 31 the following year. For example, the tax year 2014-2015 runs from April 1, 2014, to March 31, 2015, and the tax year 2015-2016 runs from April 1, 2015, to March 31, 2016.

Income Tax

Taxable income in Hong Kong is classified into different categories, and the applicable tax rates depend on the income classification. When renting out a property, landlords pay property tax instead of income tax.

Capital Gains Tax

There is no capital gains tax in Hong Kong.

Property Buying and Selling Costs/Taxes

TRANSACTION COSTS

    Who Pays?
Ad Valorem Stamp Duty (AVD) 1.50% - 8.50% buyer
Special Stamp Duty (SSD) 5% - 20% seller
Buyer’s Stamp Duty (BSD) 15% buyer
Solicitors Fee 0.075% - 0.125% buyer
Real Estate Agent Fee 0.50% - 1%
0.50% - 1%
buyer
seller
Costs Paid by Buyer 2.075% - 24.625%
Costs Paid by Seller 5.50% - 21%
ROUNDTRIP TRANSACTION COSTS 7.58% - 45.63%
Source: Global Property Guide, PWC, Deloitte

Property Holding Tax

Income derived from renting out property is subject to property tax. Property tax is charged at a standard rate of 15% of the property’s net assessable value (NAV). The NAV is calculated as the assessable value (after deducting rates paid by the owner, if applicable, and irrecoverable rent), minus an allowance of 20% for repairs and outgoings, regardless of whether these 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 tax is levied on the property owner, who is required to keep sufficient records of rent received, such as lease agreements, duplicates of rent receipts, receipts for rates, and correspondence related to lease term modifications and rent recovery for at least seven years.

Stamp Duty on Property Leases

Stamp duty on property leases is calculated at a specified rate of the annual rental value, which varies depending on the term or duration of the lease.

Lease Period Rate
Lease term is undefined or uncertain 0.25%
Up to 1 year 0.25%
1 year - 3 years 0.50%
Over 3 years 1.00%