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What are my tax obligations as a property owner |
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| 1. |
If you have derived rental
income from letting of properties situated in Hong Kong, you need
to: |
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| (a) |
Keep sufficient records of rent received, such as lease agreements
and duplicates of rent receipts, receipts for rates, correspondence
relating to modification of lease terms and recovery of rent in arrears
etc, for at least 7 years; |
| (b) | Complete and submit a tax return for
reporting rental income; |
| (c) |
Notify liability to tax (see Notification of
Chargeability for time limit and other details) unless you
have already received the tax return from us, see Examples; |
| (d) |
Notify cessation of ownership within 1 month of such cessation;
and |
| (e) |
Notify change of address within
1 month of change; and |
| (f)
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Pay
the tax. |
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| 2. |
If you receive a tax return from us, you must complete and submit it in time even if you
do not have any income from property letting.
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Which tax return is for reporting
rental income and how to complete |
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| 1. |
Property Tax Return
- Property Jointly Owned or Co-owned by Individuals (B.I.R. 57)
You should report the rental income from a property jointly owned
or co-owned by you and other persons in B.I.R. 57. [How to complete
-SEE : Completion and Filing of Property
Tax Returns] |
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| 2. |
Property Tax Return - Corporations
and Bodies of Persons (B.I.R. 58) You should report the rental
income from a property owned by a corporation or a body of persons
in B.I.R. 58. [How to complete -SEE
:Completion and Filing of Property Tax Returns ] |
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| 3. |
Tax Return - Individuals (B.I.R.
60)
- You should report the rental income from all properties solely
owned by you in Part 3 of B.I.R. 60. [How to complet -
SEE : Completion and Filing of Tax Return - Individuals (B.I.R.
60)]
- In case you are the executor of the estate of a deceased 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.
[How to complete - Please CLICK
HERE ]
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| How Property Tax is computed |
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| Property Tax is computed at the standard
rate on the net assessable value for the relevant year of
assessment (see below) of the property.
[A year of assessment runs from 1 April to 31 March of the following
year.]
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| For further information, see |
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What is rental income |
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Rental income includes:
- Gross rent received or receivable;
- Payment for the right of use of premises under licence;
- Service charges or management fees paid to the owner;
- Owner's expenditure borne by the tenant, e.g. repairs and Property Tax paid by the tenant;
- Sums previously deducted as irrecoverable rent and now recovered; and
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Lump sum premium.
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What deductions can I claim |
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| 1. |
You can claim the following
items as deductions: |
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(a) |
Rates paid by owner(s)
Only rates agreed to be paid and paid
by you is deductible. |
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Note: |
Government rent charged with rates under the same quarterly "Demand
for Rates and/or Government Rent" is not deductible for Property
Tax purposes. Please make sure not to include the amount of government
rent in the claim for deduction of rates so as to avoid an incorrect
claim. |
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(b) |
Irrecoverable
rent
Only the amount of rent confirmed to be irrecoverable
during the year is deductible.
(Attention : You need to report the amount of rent recovered as
rental income for the year of recovery in the relevant tax return
for that year of assessment. ) |
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| 2. |
Statutory Allowance for
Repairs and Outgoings |
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Repairing costs on properties
vary from one year to another. Little may be paid on new property
units. Significant amounts may have to be borne/shared by owners of
individual units, say when the exterior walls of a building have to
undergo repairs. |
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To simplify the administration
of tax assessments, a broad-brush deduction of 20% of the balance
of the rental income after deducting the rates paid by the owner(s)
and the irrecoverable rent will be
automatically granted to you every year. |
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You do not
have to tell the Assessor how much have been incurred on repairs and
outgoings for any year. For the purpose of Property Tax assessments,
the Assessor will not ask for evidence of the actual expenses incurred.
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The 20% is an all-inclusive
element ¡V so you cannot claim deductions separately for government
rent, decoration fees, rent-collection fees, building management
fees, insurance and mortgage interests. |
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(N.B. Mortgage interest
can be claimed by those owners who are eligible (please click here ) to and have elected
for Personal Assessment.)
[Please see Example] |
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Can I pay less tax by electing
Personal Assessment |
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| See
- Personal Assessment
You can Click
HERE for a brief guide to Personal Assessment, where you can find examples of how
Personal Assessment may reduce your tax liabilities.
You can also use our tax
computation program to check whether it is to your advantage
to elect Personal Assessment.
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Is there any relief if the
property is for owner's business use |
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| If the income from property chargeable to Property Tax is included
in your profits for Profits Tax purposes, or if the property you owned is occupied by you for business
purposes, the amount of Property Tax paid may be deducted from the amount of Profits Tax assessed.
Corporations carrying on a trade, profession or business in Hong
Kong may make application in writing for exemption from paying the
Property Tax, which would otherwise be set off against their Profits
Tax. |
What should I do if I disagree with the tax assessment |
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| See
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What is the tax implication on individual owners of a building
if the common areas are let out |
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| Normally, the common areas of a building such as side shop, carpark,
external wall, roof top etc are collectively owned by the individual owners of the building.
If any part of the common areas is let out, the rental income derived is chargeable to Property Tax.
The owners are responsible for reporting the rental income and paying the tax. If the owners have not
received a tax return relating to the common areas let, they are required to
notify us in writing.
However, when an owners' corporation is formed,
section 16 of the Building Management Ordinance
provides that the rights and duties of the owners relating to the common parts of the building
shall be exercised and performed by the incorporated owners of the building. Therefore, the owners' corporation is required, on behalf of all the owners of the building, to report the income and
pay the tax. |
Related Information and Pamphlets |
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See
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