Hong Kong Property Tax Guide: How Owners Can Save Smartly

In Hong Kong, property tax is a big deal for property owners. This article breaks down everything about Hong Kong's property tax, like how it's calculated, the tax rates, and exemptions, to help owners handle their property taxes better and save smartly.

What's Property Tax?

Property tax is the tax on rental income from land, buildings, or parking spaces in Hong Kong.

Who Pays Property Tax?

Only owners of rented properties pay this tax. If you live in your property, you don't pay property tax.

How's Property Tax Calculated?

The property tax rate in Hong Kong is 15% of the net rental income for the year, which runs from April 1 to March 31 the next year. Net rental income is your yearly rent minus rates, irrecoverable rent, and repair costs. The tax office automatically deducts 20% from the net rent as a standard exemption for repair costs. You can use the official property tax calculator to estimate.

Paying Hong Kong Property Tax: The Whole Process

1. Filling out the return:

The Inland Revenue Department (IRD) sends out property tax forms usually on the first working day of April each year. Owners need to fill out the “Property Tax Return for Jointly Owned Properties” (BIR57) form, providing details like rental income and deductions.

You have one month from when the form is sent to submit it. If you don't get the form, you can request to obtain a Duplicate Tax Return form.

2. Wait for assessment and pay:

The tax office assesses your property tax based on your return. Once assessed, you'll get a bill and should pay as instructed.

Property Tax and Personal Assessment

The Inland Revenue Ordinance offers personal assessment to tax relief for property owners. Owners of rented properties can get deductions for things like mortgage interest, personal allowances, and business losses in that tax year.

When renting out property, you can choose to report under ''Personal Assessment” instead of just paying property tax, which could give you more tax relief. If you're unsure, you can use the tax tools to calculate in advance.

Apply for Provisional Property Tax

To apply for provisional property tax deferment, owners must apply in writing 28 days before the tax is due or within 14 days of receiving the provisional tax notice, whichever is later. Conditions include:

• Expecting the net assessable value for the new tax year to be less than 90% of the previous year's. For example, if it was $120,000 in 2022/23 and expected to be below $108,000 in 2023/24, you can apply.
• Disagreeing with the previous year's net assessable value and having already deferred that tax.
• Selling the property during the new tax year, leading to reduced rental income.
• Applying for Personal Assessment under personal income tax and thus receiving a tax reduction.

Provisional property tax is paid in two installments, usually in November of the current year and April of the next year. You can download the Application for Holdover of Provisional tax form (IR1121) from the IRD website.

Quick Q&A on Hong Kong Property Tax

• Does Hong Kong have property tax? What's the rate? Yes, it's 15%.
• Do you pay property tax if you live in your property? No.
• Who pays property tax? Owners of rented properties.
• What's included in rental income? The total rent already collected or due; license fees for the use of the building; service and management fees paid to the owner; expenses paid by tenants like repair costs and property tax; fees for transferring the lease.
• When do you pay property tax? Usually after receiving the bill. Property tax forms are sent out on the first working day of April each year.
• What taxes do you pay on rental income? You pay property tax.
• Can you deduct expenses for rented properties? Yes, you can deduct rates and repair costs.
• Can you deduct management fees? No, owners can't deduct management fees they pay.
• How can renting owners save on taxes? Choose to report under 'Personal Assessment' for deductions like mortgage interest.
• How can owners living in their property save on taxes? Mortgage deductions: You get 15 chances to deduct 'home loan interest' during the mortgage period, up to HK $100,000.
• Can property used for business get tax relief? If you use your property for business, the property tax paid can be deducted from your profits tax. Companies operating in Hong Kong can apply for this kind of tax relief.

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