NOTES AND INSTRUCTIONS
Note 1 OWNER
    (a) "Owner" in respect of land or buildings or land and buildings in Hong Kong is defined in section 2 of the Inland Revenue Ordinance (Cap. 112) as including :-
     
a person holding the land or buildings or land and buildings directly from the Government (under normal circumstances, "owner" is primarily taken as the person whose name is registered in the Land Registry);
     
a beneficial owner;
     
a tenant for life;
     
a mortgagor;
     
a mortgagee in possession;
     
a person with adverse title to land receiving rent from buildings or other structures erected on that land;
     
a person who is making payments to a co-operative society registered under the Co-operative Societies Ordinance (Cap. 33) for the purpose of the purchase of the land or buildings or land and buildings;
     
a person who holds land or buildings or land and buildings subject to a ground rent or other annual charge;
     
(in so far as common parts are concerned) a corporation registered under section 8 of the Building Management Ordinance (Cap. 344) or a person who, on the person's own behalf or on behalf of another person, receives any consideration, in money or money's worth, in respect of the right of use of any common parts solely or with another; and
     
an executor of the estate of the deceased owner ("executor" means any executor, administrator, or other person administering the estate of a deceased person, and includes a trustee acting under a trust created by the last will of the grantor / settlor of the trust) .
    (b) Where two or more persons are joint owners or owners in common of any land or buildings or land and buildings, any of those persons appearing from any deed, conveyance, will, judgment or other instrument in writing registered in the Land Registry under the Land Registration Ordinance (Cap. 128) to be such an owner shall be answerable for doing all such acts, matters and things as would be required to be done under the provisions of the Inland Revenue Ordinance by a sole owner.
     
Note 2 The term "year" refers to the year of assessment displayed. A year of assessment runs from 1 April to 31 March of the following year. The income to be declared in the return is your income from the property for the full year, e.g. if the year of assessment 2024/25 is displayed, you should declare the total income for the period from 1.4.2024 to 31.3.2025. In commencement cases, the income derived from the date of commencement to 31 March and in cessation cases, the income from 1 April to the date of cessation should be declared.
     
Note 3 NET ASSESSABLE VALUE AND PROPERTY TAX COMPUTATION
  Property Tax is charged on owners of properties situated in Hong Kong in respect of income derived from the properties.
    (a) "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 [If it is provided in the tenancy agreement that the tenant is responsible for the payment of the management fee, the fee so paid through the landlord would not be included as rental income];
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
lump sum premium (A lump sum premium received or receivable in respect of a lease exceeding 1 year is to be spread on an equal monthly instalment basis over the period of the lease, or over a period of 3 years, whichever is the shorter. In this case you should include in the return the monthly instalments related to the year).
      If two periods of letting were involved, you should declare the first date and the last date of letting for each period during the year of assessment (e.g. if the property was let during the periods from 1.5.2023 to 30.4.2024 and from 1.6.2024 to 31.5.2025, you should enter the periods of letting as from "01/04/2024" to "30/04/2024" and from "01/06/2024" to "31/03/2025" for the year of assessment 2024/25).
       
    (b) Deductions: -
     
(i) Only rates agreed to be paid and paid by the owner and irrecoverable rent can be claimed for deduction. Irrecoverable rent means any consideration reported in this return or previously reported which has become irrecoverable during the year. Please note that the portion of rent in arrears offset by rental deposit cannot be regarded as irrecoverable.
(ii) A 20% statutory allowance for repairs and outgoings will be automatically granted in the assessment. Actual expenses like Government rent, management fees, renovation or refurbishment expenses are all non-deductible. For certain properties in Hong Kong, Government rent is payable quarterly from the date of extension of lease or 1.7.1997, as appropriate, and charged together with rates. 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.
       
    (c) The amount of Property Tax for the year (e.g. 2024/25) and the amount of Provisional Tax for the next year (e.g. 2025/26) is computed at the standard rate (15% for the years 2019/20 to 2025/26) on the Net Assessable Value of the property. Any Provisional Tax previously charged for the year (e.g. 2024/25) will be set-off against your Final Tax liability for the year (e.g. 2024/25) and the Provisional Tax for the next year (e.g. 2025/26). If, however, any owner elects Personal Assessment for the year (see Note 5 below), his / her share of Net Assessable Value will be transferred for aggregation with his / her other profits / income, and a Personal Assessment Demand Note will be issued to him / her.
       
    (d) "Net Assessable Value" is the rental income after deducting irrecoverable rent, and less rates paid by owner and a statutory allowance for repairs and outgoings of 20% of the aforesaid remaining amount.
     
Note 4 If the property is not let out for consideration, a return may not be issued annually in subsequent years. In case a return is not received but any part of your property is let out, you MUST notify this Department in writing within 4 months after the end of the basis period for the year of assessment (e.g. on or before 31 July 2025 for the year of assessment 2024/25). Details of the lease together with the file reference number of the property should be supplied. Failure to comply with the requirement is an offence for which you may be prosecuted and fined.
     
Note 5 PERSONAL ASSESSMENT
    (a) An individual who satisfies the eligibility requirements listed in item (b) below may elect for personal assessment on his / her total income to enjoy allowances and pay tax at rates applicable to Salaries Tax. Under Personal Assessment, interest payable on money borrowed for the purpose of producing rental income may be deductible.
    (b) The elector must be of or above the age of 18, or under the age of 18 and both his / her parents are dead. He / She must be either ordinarily resident in Hong Kong or is a temporary resident. (An individual will be regarded as "ordinarily resident in Hong Kong" if he / she resides in Hong Kong voluntarily and for a settled purpose (such as for education, business, employment or family etc.) with sufficient degree of continuity. Such person should habitually and normally reside in Hong Kong apart from temporary or occasional absences of long or short duration, and is living in Hong Kong as an ordinary member of the community for all the purposes of his / her daily life. "Temporary resident" means an individual who stays in Hong Kong for more than 180 days during the year of assessment in respect of which the election is made or for more than 300 days in 2 consecutive years of assessment one of which is the year of assessment in respect of which the election is made.)
    (c)

In the case of a married couple, either one or both of them are eligible to make an election for personal assessment and both of them have income assessable under the Inland Revenue Ordinance, they may jointly make an election for personal assessment. If the individual and his / her spouse are jointly assessed under Salaries Tax, the individual may not make an election for personal assessment unless both of them jointly make the election.
     

(For years of assessment up to 2017/18, if the individual is married, the election for personal assessment must be jointly made with the spouse. The individual and the spouse's income from all sources are aggregated to compute tax liability.)
    (d) Any election for Personal Assessment must be lodged on the prescribed form not later than 2 years after the end of the year of assessment in respect of which the election is made, or 1 month after an assessment of income or profits forming part of the individual's total income for such year of assessment becomes final and conclusive, whichever is the later.
     
Note 6 OFFENCES AND PENALTIES
    The Inland Revenue Ordinance provides heavy penalties for any person who:-
    (a) fails to comply with the requirements of a notice to make a return without reasonable excuse;
    (b) makes an incorrect return without reasonable excuse;
    (c) makes a false return with a fraudulent intent to evade tax;
    (d) fails to give notice of cessation of ownership of a property without reasonable excuse;
    (e) fails to keep sufficient records of rental income of his / her property without reasonable excuse; or
    (f) fails to notify a change of address without reasonable excuse.
   

EVASION OF TAX IS A CRIMINAL OFFENCE. MAXIMUM PENALTY is a fine of $50,000 PLUS a further fine of 3 times the undercharged amount and imprisonment for 3 years.