Understanding Hong Kong Tax Rules (Part 2): Property Tax
by eGuidePro, 2011-07-13 00:30 (Business and Finance)
If you live in Hong Kong and need to pay Hong Kong taxes, you should feel lucky because compared to those of many other countries, Hong Kong tax rules are relatively simple. However, many people are confused when preparing their tax returns because there are not many guidelines around. In this series of articles, we will explain some key concepts and rules for Hong Kong taxes. In this part, we will focus on the property tax.
Not everybody needs to report property tax in their Hong Kong tax return. Only details of properties which you were the sole owner, as registered in the Land Registry, and were let during the year are to be reported.
The rental income from properties partly owned by you should not be reported in your tax return. Separate Property Tax Returns will be issued in respect of the partly-owned properties. If you have not received a Property Tax Return for any let property that is partly owned by you, you need to fill in Form IR6129 or inform the Department in writing.
The property location should be the full address as registered in the Land Registry. The rental income to be reported should be the rental income for the whole letting period in the year, not monthly rental.
The deductions include rates you agreed to pay and paid by you and irrecoverable rent. Other items like Government rent, management fee, renovation or refurbishment expenses, etc., are not deductible. For Property Tax assessment, 20% of the assessable value will be deducted as a statutory allowance for repairs and outgoings.
If you had more than two solely-owned properties let during the year, supply details of other properties in the same format on a separate sheet in your tax return. Then enter the total number of properties let, amount of the rates paid by you and irrecoverable rent and assessable value of all properties let.
In case you are the executor of the estate of a deceased sole owner of a property, you should declare income from properties owned by the deceased in the return issued to you in the capacity of the executor of the estate of the deceased owner, not in your own return.
Above are some key concepts and rules related to Hong Kong's property tax. If you are still confused, you can consult Hong Kong Government's website, which has a lot of useful resources for tax. Also, you might want to consider hiring a professional to prepare your tax.
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