How many stamp duties are there? Introducing 5 Stamp Taxes on Hong Kong Properties

Buying a property in Hong Kong is a trend that will not go away. In the era when many people want to “get on the bus”, knowledge about buying a property has become very important. The huge miscellaneous expenses of buying a home are as many as the sands of the Ganges River, such as agency commissions, legal fees, decoration fees, etc. Among them, the stamp duty introduced by the Hong Kong government to prevent the uncontrollable rise in property prices is bound to be a higher cost in buying a home, and There are many types, which confuse many prospective buyers. What are the types of the stamp duty in Hong Kong? This article will introduce you one by one.

What is stamp duty? What is the main role of stamp duty?

According to Chapter 117 of the Hong Kong “Stamp Duty Ordinance”, certain designated documents must be paid to the Hong Kong Inland Revenue Department with stamp duty, otherwise, the legal effect of the document will be invalid, and it will not be accepted in legal proceedings or courts. Therefore, in order to prevent any disputes between buyers and sellers over who owns the property in the contract documents for property transfer, paying stamp duty can establish legal effect and obtain legal protection.

Stamp duty is also known as “stamp duty” in Hong Kong. As for how to determine the amount of stamp duty, it depends not only on the property price but also on the identity of the buyer, the time gap between the signing of the preliminary agreement, and the formal agreement for sale and purchase (original agreement). In addition, if you want to delay the submission of stamp duty, you have to apply to the bureau earlier, and offenders will be fined at any time.

How many stamp duties are there in Hong Kong? How should “ad valorem stamp duty”, “double stamp duty”, ” New Residential Stamp Duty, NRSD “, “buyer’s stamp duty” and “special stamp duty” be understood?

Ad Valorem Stamp Duty, AVD

If the buyer is a Hong Kong permanent resident acting on his own behalf, and he does not hold other residential properties in Hong Kong or is a first-time buyer, he basically only needs to pay “ad valorem stamp duty”, also known as “first-time homebuyer” when the property is transferred. Stamp Duty”. At the same time, the ad valorem stamp duty is calculated at different rates depending on the buyer’s situation.

Doubled Ad Valorem Stamp Duty, DSD

Strictly speaking, “Double Stamp Duty” can also be regarded as “ad valorem stamp duty”, also known as “new ad valorem stamp duty”. When the buyer is a Hong Kong permanent resident acting on his own behalf, but he is not a first-time buyer or already holds a residential property in Hong Kong, he needs to pay double stamp duty to the Inland Revenue Department.

In 2013, the new tax introduced by the Hong Kong government to prevent overheating of property prices directly doubled the ad valorem stamp duty tax, hence the name. As of November 2020, in response to the decline in the transaction volume of non-residential properties, the policy address for that year announced the abolition of the double stamp duty for non-residential properties.

New Residential Stamp Duty, NRSD

In 2016, the government implemented a stronger policy to curb property prices, and even levied a “15% ad valorem stamp duty” on top of the “double stamp duty”.

Buyer Stamp Duty, BSD

To target overseas property buyers (natural persons and corporate bodies), the Hong Kong government introduced the “Buyer’s Stamp Duty” in 2012, so that all non-Hong Kong permanent residents need to pay an additional 15% buyer’s stamp duty when buying and selling residential properties in Hong Kong. However, the buyer’s stamp duty is exempt if the buyer is a close relative of a Hong Kong permanent resident or owns the property in joint ownership.

Special Stamp Duty, SSD

As early as 2010, “SST” was introduced and only applies to residential properties acquired in October 2012 or later. The special stamp duty is especially for short-term buyers. If they transfer the property within three years after buying the property, they need to pay the special stamp duty, which varies depending on the holding time, up to 20%.

The above information is for reference only. If you have any questions about spending tax and accounting, we welcome your inquiry.