Property Tax Guide
Section 5 of Inland
Revenue Ordinance levies property tax on the property owner in respect of the
rental income of his land and building in Hong Kong. In general, the tax is
equal to: Standard rate (15%)
* 80% * (rental income – rates paid by the owner). Put it simply,
property tax is based on the actual rental profits derived from the
ownership of real property in Hong Kong.
"Owner" is defined in section 2(1) to
include a person holding directly from the Hong Kong government, a
beneficial owner, a life tenant, a mortgagor, a mortgagee in possession ...
and a person who holds land and buildings subject to a ground rent.
If the owner is a limited company
carrying on a business in Hong Kong, the company can apply for an exemption
of property tax under section 5(2) on the grounds that the income will be
assessed under profits tax. If the company has paid property tax, the
property tax paid can be utilized to set off under section 25 its profit tax
liability and if the property tax paid exceeds its profits tax liability,
the excess will be refunded to the company.
Section 5B: Rental Income includes licence fee, lump sum premium or management fee paid
or payable to
expenses (e.g. maintenance and property tax) borne by the tenant
is regarded as taxable income.
No deduction for
decoration fees, rent-collection fees, insurance and mortgage interests under
Property Tax. In theory, such expenses have been covered by
the 20% flat-rate deduction.
No more allowance even though the
owner actually incurs more
Nevertheless, mortgage interest may be deductible under
Personal Assessment if the
owner elects to be personally assessed.
deposit returnable to the tenant is not
Property tax of
individual taxpayers are handled by Unit 2
whereas all other property tax cases are handled by
Property Tax Center of Headquarter Unit.