Hong Kong Property Stamp Duty Tax Guide 2023

According to the "Stamp Duty Ordinance" in the laws of Hong Kong, when you buy and sell real estate in Hong Kong, you will be charged a certain amount of stamp duty by the government, otherwise the relevant documents will have no legal effect, especially when the documents involve legal proceedings, the documents will not be accepted by the court . Stamp duty on property transactions is generally divided into Ad Valorem Stamp Duty (AVD), Additional Stamp Duty (SSD) and Buyer's Stamp Duty (BSD), which correspond to different transaction situations.

 As far as residential units are concerned, stamp duty on property transactions can generally be divided into three categories, corresponding to different transaction situations. These include Ad Valorem Stamp Duty (AVD), Additional Stamp Duty (SSD) and Buyer's Stamp Duty (BSD).
 

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1. Property type

To know how much stamp duty you need to pay when you buy a property, you must first understand the nature and background of the property. If it belongs to a residential unit, the stamp duty will be affected by many factors (see 2. Buyer’s identity). 

As for non-residential projects such as car space, industrial and commercial real estate, you need to pay the Ad Valorem Stamp Duty (AVD) of the first standard rate only. For example, if you buy a car space with HKD 2.4 million, the tax rate is 2.25% according to the second part of the first standard of the Ad Valorem stamp duty (AVD) you need to pay HKD 54,000 ($2,400,000 x 2.25%) tax. 

Regardless of whether it is a Hong Kong buyer or not, whether it is the first purchase or a non-first purchase of a non-residential project, there will be no change in stamp duty, and there will be no additional stamp duty when it is sold.

2. Buyer identity

If it belongs to a residential project, the amount of stamp duty changes due to the identity of the buyer. If you are Hong Kong permanent residents and are a first-home buyer, you only need to pay the Ad Valorem Stamp Duty (AVD) of the second standard tax rate. 

Taking a HKD 6 million property as an example, the stamp duty expense is HKD 180,000 ( HKD 6,000,000 x 3%). However, if you are a non-first home buyer, you will have to pay the first part of the first standard of Ad Valorem Stamp Duty (AVD), which is HKD 900,000 (HKD 6,000,000 x 15%). The difference between the two tax amounts is as much as 5X. 

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If you belong to a non-Hong Kong person or buy a Hong Kong property as a company, in addition to paying the Ad Valorem Stamp Duty (AVD) Part 1 of the first standard of 15%, you need to pay an additional Buyer's Stamp Duty (BSD) at a rate of 15% of the property price , the total stamp duty will be 30%, costing the 6 million property is 900,000 Ad Valorem Stamp Duty (AVD) ($6,000,000 x 15%) and 900,000 ($6,000,000 x 15%) buyer's stamp duty, a total of 1.8 million.
 

3. Time limit for selling property

If you are planning to sell your residential unit, be aware of the additional stamp duty (SSD) charge for the resale deadline. If the property is held for less than 6 months, the tax rate is 20%, for 6 to 12 months, the tax rate is 15%, and if the property is held for 12 to 36 months, the tax rate is 10%. 

Assuming that the property is sold at HKD8 million, no matter what is the purchase price, the additional stamp duty is as high as HKD1.6 million (HKD 8,000,000 x 20%) if the holding period is 6 months. The stamp duty is HKD1.2 million (HKD 8,000,000 x 15%) if the holding period is 6 to 12 months. The tax for holding the goods for 12 to 36 months is HKD800,000 (HKD 8,000,000 x 10%), and the difference between the highest and lowest tax rates is exactly double.

4. Penalties for late payment of stamp duty

For general residential transactions, stamp duty must be paid within 30 days after the signing of the first agreement or conveyance of the transaction, otherwise fines will be charged. If not later than 1 month, the penalty is 2 times the amount of stamp duty, if more than 1 month but not later than 2 months, the penalty is 4 times the amount of stamp duty, if in other cases, the penalty is 10 times the amount of stamp duty , so remember to pay the stamp duty on time to avoid additional tax expenses.

The Stamp Office will decide to reduce or exempt part of the fine according to individual circumstances. If a reasonable reason can be provided and it is not intentional delay, it can be reduced as appropriate. Generally, the penalty is 14% x stamp duty payable x number of days overdue / 365 days, and the fine is at least HKD 500. Assuming that the stamp duty payable is HKD100,000 and the number of days in arrears is 45 days, it is HKD 1,726 (14% x HKD 100,000 x 45 / 365). The reduction or exemption of the penalty must be made in writing.

Ad Valorem Stamp Duty is Ad Valorem Stamp Duty, or AVD for short, which is a kind of property stamp duty that must be paid when property is transferred. The tax rate will vary depending on the buyer's situation. It can be simply divided into two types: first home stamp duty and non-first home stamp duty. 

If you are a permanent resident of Hong Kong and do not have any residential property under your name, you can pay the AVD at a relatively low rate.

The specific tax items of the first home stamp duty range from 0.01% to 4.25%, which vary with the increase in the property price of the purchased unit. Assuming that the value of the property you purchased is HKD 6 million, you need to reserve 3.75% of the property price, or HKD 225,000 for stamp duty on property purchases.

If you have Hong Kong permanent resident status but are not a first-time home buyer, you need to pay 15% of the property price as property stamp duty during the process of buying a property. Different from the first-home stamp duty, the tax rate of the non-first-home stamp duty will not increase with the increase in property prices, and is uniformly 15%. (Mortgage Calculator: List all property purchase expenses in detail)
 

The English full name of Additional Stamp Duty is Special Stamp Duty, SSD. It is a "spicy trick" set by the government in order to curb short-term speculation and reduce the increase in property prices. As long as the buyer sells the unit within 36 months after purchasing the unit, the seller has to pay an additional stamp duty of up to 20% of the perch price. The market also refers to this 36-month lock-up period.

For ordinary Hong Kong home buyers, this type of stamp duty can basically be ignored. The buyer's stamp duty is Buyer Stamp Duty, BSD, which is mainly aimed at overseas investors (non-Hong Kong permanent residents) and those who purchase residential properties in the name of a company. A uniform buyer's stamp duty of 15% of the property price is charged.

Stamp duty rates table link

If you want to calculate stamp duty expenses and the overall cost of home ownership more simply and directly, you may wish to use our mortgage calculator (including detailed stamp duty calculator) to help you plan your budget!
 

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Who should pay the stamp duty on property purchase?

In general, the property stamp duty that needs to be paid when buying a property is usually paid by the buyer except for the additional stamp duty SSD. However, sometimes developers may offer preferential plans for payment of stamp duty in order to attract buyers into the market.

During the entire process of buying a property, when do you have to pay various property purchase stamp duties?

Usually, when the buyer signs the formal sales contract, the check for the stamp duty amount will be handed over to the lawyer firm, and all procedures will be handled by the lawyer on his behalf.

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Is there a detailed stamp duty schedule for property purchase?

Click to view the detailed stamp duty table

https://www.mreferral.com/en/stamp-duty-rates/ 
 

Is there a tax refund for exchanging old flats for new flats?

As long as the buyer sells the original only residential property within 6 months of purchasing the new residential property, he can apply for a refund of part of the AVD non-first home stamp duty.

The above stamp duty knowledge can be used as a basic reference for property transactions. However, different situations often arise in property purchase and property sales. If you have any questions about taxes, you can consult a tax consultant or tax bureau to calculate your actual additional expenses for property purchase or property sale.

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