Hong Kong Property Tax Guide: 15% on Deemed Rental Income, No CGT but Stamp Duties
Hong Kong imposes Property Tax at 15% on the deemed rental income of real estate in Hong Kong. The tax is charged on the net assessable value (80% of gross rent after a standard 20% deduction for repairs and outgoings). There is no capital gains tax on property sales, but significant stamp duties apply to residential transactions — including Seller's Stamp Duty (10–20%) and Ad Valorem Stamp Duty (7.5–15%). Property ownership itself is not taxed.
Property Tax is one of Hong Kong's three direct taxes under the Inland Revenue Ordinance. It applies to owners of land and buildings in Hong Kong who receive rental income. The tax is charged at the standard rate of 15% on the net assessable value. The net assessable value is 80% of the actual rent received or receivable (the 20% statutory deduction covers repairs, insurance, and other outgoings — no actual expenses need to be proven). Unlike many jurisdictions, there is no deduction for mortgage interest, depreciation, or property management fees. Property Tax is separate from Profits Tax: if a company receives rental income, it is charged under Profits Tax instead, with the same 15% standard rate effectively applying in most cases. How corporate property income is taxed →
Real-world example: A residential flat in Hong Kong Island rented for HKD 50,000 per month (HKD 600,000 per year). The net assessable value is HKD 600,000 × 80% = HKD 480,000. Property Tax = HKD 480,000 × 15% = HKD 72,000 per year. The owner cannot deduct mortgage interest, management fees, or rates (government rates are paid separately and added to the tenant's outgoings). If the owner sells the flat after 5 years for a HKD 2 million gain, no capital gains tax is payable — but Buyer's Stamp Duty (if buyer is a non-permanent resident) or Seller's Stamp Duty (if sold within 2 years) may apply. Learn why property gains are tax-free →
Property Tax Rate and Calculation
Property Tax is charged at 15% on the net assessable value (NAV). The formula is: Gross rent × 80% = NAV. HKD 100,000 rent = HKD 80,000 NAV = HKD 12,000 tax. Key features: (1) The 20% deduction is automatic — you do not need to produce receipts. (2) No deduction for mortgage interest, even if the property is heavily mortgaged. (3) Government rates paid by the owner are not deductible from Property Tax. (4) If the property is vacant, no Property Tax is payable. (5) Concessionary rates may apply to certain categories of properties (e.g., hotels, some commercial properties).
Stamp Duty on Property Transactions
While there is no capital gains tax on property, Hong Kong imposes significant stamp duties on residential property transactions. Scale 2 — Ad Valorem Stamp Duty (AVSD): 7.5% for properties up to HKD 2 million, up to 15% for properties over HKD 10 million (standard rate). Scale 1 — Higher AVSD: 15% on all residential property purchased by companies or non-Hong Kong permanent residents. Special Stamp Duty (SSD): 10% if sold within 6 months, 15% if sold within 6–12 months, 20% if sold within 12–24 months. SSD was previously higher but was relaxed in 2024. Buyer's Stamp Duty (BSD): 7.5% for non-permanent residents and companies buying residential property. These stamp duties make short-term property trading uneconomical in Hong Kong.
No Capital Gains on Property
Hong Kong does not impose capital gains tax on the sale of property. Gains from selling a property — whether residential, commercial, or industrial — are not taxable per se. However, if the IRD determines that the taxpayer is engaged in property trading (frequent buying and selling, development and sale), the gains may be recharacterized as trading profits chargeable to Profits Tax. The badges of trade apply: frequency of transactions, holding period, intention at acquisition, and nature of the asset. A single sale of a long-held property by an individual is clearly capital. Frequent flips or development activities are likely trading. Professional advice is recommended for borderline cases.
Property Ownership: No Annual Wealth Tax
Hong Kong does not impose any annual tax on property ownership. There is no wealth tax on property values, no net worth tax, and no imputed rental income tax for owner-occupied properties. The only recurring costs are: Government Rates (calculated at 5% of rateable value, paid quarterly by owners), Management Fees (to the building management company), and Government Rent (a nominal amount for leased land). For owner-occupied residential property, there is effectively no property-related tax — one of the lowest tax burdens on homeownership in the developed world.
What is the Property Tax rate in Hong Kong?
Property Tax is 15% of net assessable value (80% of gross rent). The 20% statutory deduction covers repairs and outgoings. No deductions for mortgage interest or other actual expenses are allowed.
Do I pay capital gains tax when selling property in Hong Kong?
No, there is no capital gains tax in Hong Kong. However, frequent property trading may be taxed as trading profits under Profits Tax. Stamp duties (SSD, AVSD) apply on residential property transactions.
What is the difference between Property Tax and Stamp Duty?
Property Tax is an annual tax on rental income from real estate. Stamp Duty is a one-time transaction tax on the purchase or sale of property (and other documents). Stamp duty applies even if the property is owner-occupied and no rental income is received.
Is there a tax on owning property in Hong Kong?
No. There is no wealth tax, no annual property tax on ownership, and no tax on imputed rental income for owner-occupied homes. Only Government Rates (based on rateable value) are payable, which is a service charge, not a tax.