Hong Kong property tax is charged on persons who are the owners of any land or buildings located in Hong Kong and who earn rental income from this land or those buildings. Certain additional deductions (e.g. mortgage interest) are available when the taxpayer concerned elect for personal assessment, subject to certain conditions and proper application.
How is Property tax Calculated?
It is computed at the standard rate of 15% on the net assessable value of the property for the relevant year of assessment. A year of assessment runs from 1 April to 31 March of the following year. It is computed by following a tax formula that includes the following variables: rental income, irrecoverable rent, rates paid by the owner, and statutory allowance for repairs and outgoings. To this net assessable value (“NAV”) the standard rate is applied unless personal assessment is chosen.
Holdover of Provisional Property Tax
According to tax authorities, an application for holding over of provisional property tax may be made on one of the following grounds:
- The assessable value for the year of assessment for which provisional tax was charged is, or is likely to be, less than 90% of the assessable value for the preceding year or of the estimated assessable value in respect of which you are liable to pay provisional tax.
- For example, if you are assessed to provisional property tax based on an assessable value of $300,000, you may apply for holding over of payment of provisional tax if the assessable value for the relevant year is, or is likely to be, less than $270,000.
- Full particulars of the rental received and receivable should be furnished in support of your application.
You have ceased, or will before the end of the year of assessment for which provisional tax was charged cease, to be an owner of property, and the cessation of ownership will result in a reduction of the assessable value on which provisional tax was charged.
- Full particulars of the cessation of ownership and the rental received and receivable should be furnished in support of the application.
You have elected to be personally assessed for the year of assessment for which provisional tax was charged, and the election is likely to reduce your liability to tax.
You have objected to your property tax assessment for the year preceding the year of assessment for which provisional tax was charged.
We can advise our clients on their property tax matters and stamp duty. Meanwhile, we help clients to have the property tax filing on an appropriate tax return within the deadlines to avoid late filing fees or penalties.
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