Property Tax
Property tax is charged on owners of land and buildings in Hong Kong in respect of rental income. The tax is assessed at 15% of the net assessable value (NAV), which is the assessable value less a statutory deduction of 20% for repairs and outgoings.
Stamp Duty
Ad Valorem Stamp Duty (AVD)
Payable on the consideration or value of the property. Standard rates (Scale 1) range from 1.5% to 8.5%. Hong Kong permanent residents purchasing their first residential property as their only property may pay at the reduced Scale 2 rates (HK$100 to 4.25%).
Buyer’s Stamp Duty (BSD)
BSD of 15% is payable by any person who is not a Hong Kong permanent resident, and by all companies, purchasing residential property. BSD applies in addition to AVD.
Special Stamp Duty (SSD)
SSD applies to residential property resold within 24 months of acquisition, at rates of 20%, 15%, or 10% depending on the holding period.
Stamp Duty on Share Transfers
Transfer of Hong Kong stock attracts stamp duty at 0.2% of consideration (0.1% each from buyer and seller). This is significant in M&A transactions structured as share deals rather than asset deals.
Case Study: Purchasing Property Through a Company
A client enquired about purchasing a residential investment property through a Hong Kong company to potentially reduce stamp duty. Analysis revealed that purchasing through a company would actually increase the duty — both AVD at Scale 1 and BSD of 15% would apply, totalling approximately 23.5%. The client proceeded with a personal purchase, with advice on structuring rental income and claiming mortgage interest deductions under the personal assessment regime.