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Stamp duty on property sales

According to Hong Kong’s Stamp Duty Ordinance, all documents that need to prove transactions are subject to a stamping fee, which is stamp duty. Such transactions include rental properties, stock transactions, and property transactions. Transaction documents that are not printed will lose their legal effect. In the event of disputes between the two parties, they cannot be submitted to the court for testimony or evidence, and the transaction documents will not be accepted by the court.

First-time home buyers, or those who do not hold any residential property at the time of the transaction, will only have to pay ad valorem stamp duty of up to 4.25%, while non-first-time home buyers will have to pay ad valorem stamp duty of up to 15%. If the buyer is a non-Hong Kong permanent resident, an additional buyer’s stamp duty of 15% is required. Non-Hong Kong permanent residents also include limited company buyers. In addition, buyers (except for limited companies) who have held the property for less than three years are required to pay a special stamp duty of 10-20%.

Due to the high stamp duty, more and more buyers are buying and selling properties in the name of a limited company. However, buyers should note that only a limited company with an independent legal personality and identity can hold the property first, and the director of a limited company must also meet the requirements of the Companies Ordinance. For example, he cannot be bankrupt. An unlimited company without independent legal person status and identity cannot hold property. The transfer of property ownership is carried out by the shareholders of the limited company by selling shares to the buyer. The tax bureau only levies stamp duty at 0.26% of the value of the transferred securities, and the limited company will not have to pay 10-20 for holding the property for less than three years. % special stamp duty.

For example, if a buyer who is not a first-time home buyer and already holds a property (a Hong Kong permanent resident) buys a dwelling valued at HK$10 million, the buyer will have to pay 15% ad valorem stamp duty, which is HK$1.5 million. However, if the buyer purchases shares in a property limited company, the Inland Revenue Department only calculates 0.26% tax on the value of 10 million, that is, only pays $26,000 in stamp duty. The difference in stamp duty between the two purchase methods is 100 times. In addition, if the buyer purchases a property held by a natural person owner, the buyer is not a Hong Kong permanent resident, and the property is resold to another buyer within three years, he is also required to pay 15% buyer’s stamp duty and 10% buyer’s stamp duty. – The 20% special stamp duty, together with the 15% ad valorem stamp duty on purchases, adds significantly to the total cost.

The above information is for reference only. If in doubt, we welcome your tax inquiry

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