Section 26E of the Inland Revenue Ordinance states that the interest paid on loan for purchase of residence is tax deductible. All of the following conditions must be satisfied before the deduction can be claimed and granted:

• You are the property owner (as a sole owner, a joint tenant or tenant in common) and ownership is by reference to the registered owners of the property as shown in the record of the Land Registry;
• The property is a separate rateable unit in Hong Kong;
• The property is wholly or partly used by you as your place of residence in the year of assessment (if the property is partly used as the place of residence, the amount of interest deductible will be restricted accordingly);
• Home loan interest is paid by you during the year of assessment on a loan which was obtained for the acquisition of the property;
• The loan is secured by a mortgage or charge over the property or over any other property in Hong Kong; and
• The lender is the Government, a financial institution, a registered credit union, a licensed money lender, the Hong Kong Housing Society, your employer, or any organization or association approved by the Commissioner of Inland Revenue.

Amount of Deduction

From 2017/18 onwards, the entitlement period for home loan interest is extended from 15 to 20 years of assessment (not necessarily consecutive), while maintaining the current deduction ceiling of $100,000 a year.

Sole Ownership
If you are the sole owner of the dwelling, the amount deductible is the home loan interest actually paid by you in the year of assessment, subject to the maximum deduction for the year of assessment as specified.

Part Ownership
If you are a joint tenant or tenant in common of the dwelling, the home loan interest is regarded as having been paid by the joint tenants in equal shares, or by the tenants in common each in proportion to their share of ownership in the dwelling.

Re-mortgaged Loan
If the property was re-mortgaged to obtain additional funds for non-qualifying purposes, then no deduction is allowable for the interest paid on the additional loan amount.

Car Parking Space
The home loan interest on the car parking space which is in the same development as the dwelling and used by you is also deductible provided that the home loan interest in respect of the dwelling is also claimed for the same year of assessment.

Deduction for Married Persons

Where both of the married person and the person’s spouse have assessable income chargeable to Salaries Tax and one of them has income less than the total of allowable home loan interest and basic allowance, the couple may elect joint assessment so that the relevant home loan interest would be deductible from their aggregate assessable income. Further, where either a married person or the person’s spouse, being the owner of the dwelling, has no salary income, rental income or profits chargeable to tax during the year of assessment, he/she may nominate the other spouse to claim the deduction. The owner (and not the other spouse) would be regarded as having been allowed the deduction for a year of assessment. If the owner has income chargeable to tax, he/she should not make the nomination but to elect for Joint Assessment or Personal Assessment jointly with spouse.

Sources：Hong Kong Inland Revenue Department’s websites

- https://www.ird.gov.hk/eng/pdf/bir60_hli_e.pdf