In this article, we will introduce the property tax and provisional property tax that owners are most concerned about, explain the details of the tax related to rental properties in Hong Kong, and most importantly, teach you how to calculate the tax with examples. Whether it is a prospective property investor or an owner, it is suitable for reading, and friends who want to know more about the calculation of property tax are welcome to continue to refer to the text:
Know the due date of property tax
Before calculating property tax, you can check the relevant tax payment date from the tax notice issued by the Inland Revenue Department. The general tax year is from April 1st to March 31st of the following year.
Unless you have not lodged an objection with the authorities, or have applied for a holdover of provisional tax and have received the approved amount of tax, you should pay the tax listed on the notice of assessment on or before the tax payment date .
How is property tax calculated?
“Property tax” is calculated at the “standard rate” on the “net assessable value” of the rental property for the year of assessment.
How to calculate property tax, the formula for the net assessable value of a property rental is as follows:
［A］ Rental income
[B] Non-recoverable rent
[C] Assessable Value (A-B)
［D］ Rates paid by owners
[F] Standard allowance for repairs and expenses (E x 20%)
Net Assessable Value (E-F)
Repair costs may vary from case to case due to property condition. In order to simplify the calculation process, the Inland Revenue Department will automatically deduct 20% of the landlord’s net rental income, including all miscellaneous expenses arising from renting, as a standard allowance for repairs and expenses, and the landlord does not need to provide the Inland Revenue Department with the relevant Proof of actual expenditure.
In addition, once the tenant is in arrears of rent, the landlord still needs to calculate the arrears of rental income when reporting property tax; if it is truly determined that the rent cannot be recovered, he can apply for a deduction from the rental income.
What is the rate of property tax?
Check the tax rate of property tax, the tax rate for 2008/09 and subsequent years is 15% of the net assessable value. Please refer to the following table for details:
Year of assessment Tax rate
2008/09 and after 15%
2004/05 to 2007/08 16%
Example of property tax calculation?
Assuming the following example, in the year of assessment 2020/21, the monthly rent of the property is $10,000 and the rates expense is borne by the tenant.
Final Assessment for 2021/22 and Provisional Property Tax for 2022/23:
Assessable Value (12 Months Rent) $120,000
Less: 20% repair and expense allowance of $24,000
Net Assessable Value $96,000
2021/22 Property Tax at 15% $14,400
Plus: 2022/23 Provisional Tax $14,400
(calculated based on 2021/22 net assessable value and standard tax rate of 15%)
Total tax payable $28,800
Please refer to the above information. If you have any questions about taxation, accounting, bankruptcy, we welcome your inquiries.