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Hong Kong Property Tax Introduction

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Hong Kong Property Tax Introduction

The Scope of the Charge

Property Tax is charged on the owners for letting land and/or buildings in Hong Kong and is computed at the standard rate of 15% of the net assessable value of the property.

The Basis of Assessment

The assessable value is computed by reference to the actual consideration payable to the owner in respect of the right of use of the property. Examples of the said consideration to be included in the assessable value are gross rent (received or receivable), payment for the right of use of premises under licence, lump sum premium, services charges and management fee paid to the owner, owner’s expenditure (e.g. repairs) borne by the tenant and sums previously deducted as irrecoverable rent and now recovered. The net assessable value is the assessable value (after deduction of rates paid by the owner) less an allowance of 20% for repairs and outgoings.

Deductions Allowed

The following items can be claimed as deductions:

1.
Rates agreed to be paid and paid by the property owner;

2.
Amount of rent confirmed to be irrecoverable during the year of assessment (sums so deducted as irrecoverable rent and later recovered should be included in arriving at the assessable value in the year of recovery);

3.
A 20% notional allowance automatically granted for repair and outgoings. This is a flat rate deduction irrespective of the actual amount spent and is to be given after deduction of rates and irrecoverable consideration.
 
No other expenses are deductible for Property Tax purposes.

Properties for Owner’s Business Use

If the income from property chargeable to Property Tax is included in the taxpayer’s profits for Profits Tax purposes, or if the property owned by the taxpayer is occupied by him/her for business purposes, the amount of Property Tax paid may be deducted from the amount of Profits Tax assessed. Corporations carrying on a trade, profession or business in Hong Kong, on application made in writing to the Inland Revenue Department, may be exempt from paying the Property Tax, which would otherwise be set off against their Profits Tax.

Source:Hong Kong Inland Revenue Department’s website
- https://www.ird.gov.hk/eng/pdf/pam54e.pdf
- https://www.gov.hk/en/residents/taxes/property/propertycompute.htm
- https://www.gov.hk/en/residents/taxes/property/propertyincome.htm
- https://www.gov.hk/en/residents/taxes/property/deduction/statutory.htm
- https://www.ird.gov.hk/eng/tax/ind_ppt.htm

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