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There is no tax deduction for reported rental income/sole proprietorship or partnership profits?

Hello, everyone! Recently we have received a lot of questions about taxation and feel that it is necessary to write an article to provide to you some practical tax knowledge. We are committed to studying Hong Kong tax regulations and rules. Starting today, we will explain the different parts of Hong Kong’s taxation system from time to time, hoping to answer common tax questions and remind you of related tax responsibilities. As long as you take a moment to read it carefully, there are always some topics that apply to your personal or your company’s case.

There is no tax deduction for reported rental income/sole proprietorship or partnership profits?

According to the tax regulations, salary is tax deductible to a company. However, for rental income or income from business (personal taxation),  the landlord or business owner have to choose the personal assessment method to be eligible for the deduction.

On the other hand, landlords can also declare deductions for the interest on the contributions of the leased property after they choose to be taxed under personal assessment. If the proprietor or partner has employment income at the same time, they can directly offset the personal income from the employment of the business loss (if any) in the selection of personal assessment.

However, the choice of personal assessment may not be beneficial in every case. In some cases, it may be advantageous not to choose personal interest and taxation. Although you are not sure whether it is advantageous, as long as you state your wish to choose personal assessment in the tax return, the Hong Kong tax system will calculate the tax for choosing personal assessment and the tax for not choosing personal assessment for your case. Under the comparison of the two taxes, if the tax payment for personal assessment is larger, the Hong Kong Tax office will take the initiative to notify the taxpayer and assess the tax in the most advantageous way.

We welcome your enquiries about any taxation.

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