Calculating Stamp duty for Rents and Sale in Hong Kong
What is a Stamp Duty?
For those unfamiliar with the term, a stamp duty is a tax that governments place on legal documents, usually in the transfer of assets or properties. Stamp duties are sometimes also referred to as stamp tax or documentary stamp tax. The taxes are imposed on documents for certain types of transactions that need to be recorded legally, such as marriages, military commissions, and the sale or transfer of property.
What Needs to be Stamped?
Hong Kong has four main types of documents subject to stamp duty listed in the Stamp Duty Ordinance (Cap. 117):
- Conveyance on sale (i.e., assignment)
- Agreement for sale of immovable property
- Lease of immovable property (i.e., tenancy agreement)
- Transfer of Hong Kong stock
What Are Hong Kong’s Stamp Duty Rates?
Hong Kong’s Stamp Duty Rated can be rather confusing, but we explain each part of the stamp duty step by step below.
There are 4 main types of property stamp duties in Hong Kong
- Ad Valorem Stamp Duty (AVD)
- Buyer Stamp Duty
- Special Stamp Duty
- Stamp Duty for Leases
Sale or Transfer of Immovable Property
For Residential Buyers
Stamp duties for residential buyers can be particularly confusing because there are two different Ad Valorem Stamp Duties (AVD), the new one that came into effect on 5 November 2016 and the original one that was in effect before that date.
In general, the duty rates on the original AVD are lower than the rates on the new AVD. Most buyers will likely use the new AVD, but certain buyers may qualify for the lower rates on the old AVD. To qualify for the original AVD you must be a:
- Hong Kong Permanent Resident
- First time residential property buyer
- Acting on your own behalf (you must be the legal & beneficial owner)
If all of the above apply to you, then your stamp duty rate is calculated by the following chart:
Property Value (HKD) | Scale 2 | |
Exceeds | Does not exceed | (Original AVD Stamp Duty) |
$0 | $2,000,000 | $100 |
$2,000,000 | $2,351,760 | $100 + 10% of excess over $2,000,000 |
$2,351,760 | $3,000,000 | 1.5% |
$3,000,000 | $3,290,320 | $45,000 + 10% of excess over $3,000,000 |
$3,290,320 | $4,000,000 | 2.25% |
$4,000,000 | $4,428,570 | $90,000 + 10% of excess over $4,000,000 |
$4,428,570 | $6,000,000 | 3% |
$6,000,000 | $6,720,000 | $180,000 + 10% of excess over $6,000,000 |
$6,720,000 | $20,000,000 | 3.75% |
$20,000,000 | $21,739,120 | $750,000 + 10% of excess over $20,000,000 |
$21,739,120 | 4.25% | |
If any of the criteria above did not apply to you, then your stamp duty is calculated by the New AVD’s Scale 1 Part 1 which is also known as Buyer’s Stamp Duty (BSD) (Scale 1 Part 1). It is 15% of the stated consideration or the market value of the property, whichever is higher.
For Non-residential Buyers
If you are buying property for commercial, industrial, or retail use, then you stamp study is calculated by the following chart:
Property Value (HKD) | Scale 1 (Part 2) | |
Exceeds | Does not exceed | (New AVD Stamp Duty) |
$0 | $2,000,000 | 1.5% |
$2,000,000 | $2,351,760 | $30,000 + 20% of excess over $2,000,000 |
$2,351,760 | $3,000,000 | 3% |
$3,000,000 | $3,290,320 | $90,000 + 20% of excess over $3,000,000 |
$3,290,320 | $4,000,000 | 4.5% |
$4,000,000 | $4,428,570 | $180,000 + 20% of excess over $4,000,000 |
$4,428,570 | $6,000,000 | 6% |
$6,000,000 | $6,720,000 | $360,000 + 20% of excess over $6,000,000 |
$6,720,000 | $20,000,000 | 7.5% |
$20,000,000 | $21,739,120 | $1,500,000 + 20% of excess over $20,000,000 |
$21,739,120 | 8.5% | |
Special Stamp Duty (SSD)
Whenever a property is bought and resold within a 36-month period, buyers and sellers need to pay a Special Stamp Duty. If the property owner has held onto their property for more than 36 months, it will not be affected by Special Stamp Duty. For those buying or selling property that has been bought within the last 36 months, the following rates apply:
Holding period | Special Stamp Duty Rate (calculated by % of property’s market value or stated consideration, whichever is higher) |
6 months or less | 20% |
More than 6 months but for 12 months or less | 15% |
More than 12 months but for 24 months or less | 10% |
More than 24 months but for 36 months or less | 10% |
Lease of Immovable Property
For those looking to lease immovable property in Hong Kong, your stamp duty is calculated by the following chart:
Term | Rate | |
Not defined or is uncertain | 0.25% x of the yearly or average yearly rent* | |
Exceeds | Does not exceed | |
1 year | 0.25% x of the total rent payable over the term of the lease* | |
1 year | 3 years | 0.5% x of the yearly or average yearly rent* |
3 years | 1% x of the yearly or average yearly rent* | |
Key money, construction fee etc. mentioned in the lease | 4.25% of the consideration if rent is also payable under the lease. Otherwise, same duty as for a sale of immovable property | |
Duplicate or counterpart | $5 each | |
*the yearly rent/average yearly rent/total rent has to be rounded-up to the nearest $100.
Transfer of Hong Kong Stock
For Hong Kong stock, your stamp duty is calculated by the following chart:
Nature of Document | Rate (Before 1 August 2021) | Rate (After 1 August 2021) |
Contract Note for sale or purchase of any Hong Kong stock | 0.1% of the amount of the consideration or of its value on every sold note and every bought note | 0.13% of the amount of the consideration or of its value on every sold note and every bought note |
Transfer operating as a voluntary disposition inter vivos | $5 + 0.2% of the value of the stock | $5 + 0.26% of the value of the stock |
Transfer of any other kind | $5 | |
If you are looking for stamp duty rates, you can always refer to a stamp duty calculator to calculate the stamp duty on a property. Familiarizing yourself with Hong Kong’s stamp duty and its legalities will be a great benefit in the future.
If you are interested in apartments for sale in Hong Kong or real estate investing in Hong Kong, contact our real estate agents in Hong Kong at Engel & Volkers for more information and viewings of the luxury homes and apartments for sale and rental. Engel & Volkers’ product portfolio ranges from elite homes, luxury mansions, premium residential properties, and other real estate for sale in Hong Kong. We also provide information regarding the real estate market and housing market prices.
Source: https://www.gov.hk/en/residents/taxes/stamp/stamp_duty_rates.htm
Find more at our website at https://www.hongkongev.com
