Imagine buying a Hong Kong apartment and being told you can’t sell it for three years without facing a massive tax penalty. That was the reality for property owners for over 13 years—until February 28, 2024, when Hong Kong’s government made a historic decision to abolish the Special Stamp Duty (SSD) and other property cooling measures. This landmark change has transformed the residential property landscape, offering unprecedented flexibility for buyers and sellers alike. Let’s explore what this means for your property transactions in today’s market.

The End of an Era: Why SSD Was Abolished

For more than 13 years, Hong Kong’s Special Stamp Duty stood as a formidable barrier against property speculation. Introduced in November 2010 during a period of rampant property price inflation, SSD imposed heavy taxes on properties sold within specific holding periods. However, by early 2024, the economic landscape had shifted dramatically. Property prices had fallen to seven-year lows, transaction volumes had plummeted, and the cooling measures were no longer serving their intended purpose.

The Government’s Rationale

Financial Secretary Paul Chan announced in the 2024-25 Budget that “after prudent consideration of the overall current situation, we decide to cancel all demand-side management measures for residential properties with immediate effect.” The government recognized that:

• Property prices had declined 23% from their 2021 peak
• Previous relaxation measures in October 2023 had failed to revive the market
• High interest rates and economic uncertainty were suppressing demand
• The measures were no longer necessary given current market conditions

What Was the Special Stamp Duty?

Special Stamp Duty was a transaction-based tax designed to discourage short-term property speculation. Unlike capital gains tax, SSD was levied on the transaction instrument itself—the agreement for sale or conveyance—regardless of whether the property was sold at a profit or loss. The duty was calculated based on the higher of the stated consideration or the property’s market value.

Historical SSD Rates and Holding Periods

Current Stamp Duty Requirements: What You Pay Now

With the abolition of SSD, Buyer’s Stamp Duty (BSD), and New Residential Stamp Duty (NRSD), Hong Kong’s property tax structure has been dramatically simplified. As of February 28, 2024, all residential property transactions are subject only to Ad Valorem Stamp Duty (AVD) at Scale 2 rates.

Ad Valorem Stamp Duty (AVD) Scale 2 Rates (2024-2025)

Who Benefits from the SSD Abolition?

The removal of Special Stamp Duty has created opportunities across the property market spectrum. Here’s how different stakeholders are affected:

Property Investors and Owners

• No holding period restrictions: You can buy and sell properties at any time without SSD penalties
• Increased portfolio flexibility: Respond quickly to market opportunities or changing circumstances
• Reduced transaction costs: Only AVD applies, making property flipping more viable

International Buyers

Previously, overseas purchasers faced a triple burden: SSD, Buyer’s Stamp Duty (BSD), and New Residential Stamp Duty (NRSD). With all three abolished, international investors now enjoy equal treatment with Hong Kong residents, paying only the Scale 2 AVD rates.

Property Developers

Developers benefit from increased market liquidity and buyer confidence. The removal of holding period restrictions encourages more active participation in both primary and secondary markets, potentially boosting new project launches and sales.

Transitional Arrangements: What About Properties Purchased Before February 28, 2024?

While SSD has been abolished for transactions from February 28, 2024 onwards, transitional rules apply to properties purchased before this date. Understanding these rules is crucial to avoid unexpected tax liabilities.

1. Properties purchased before February 28, 2024: If you acquired a property before this date and sell it on or after February 28, 2024, the SSD framework that was in effect at your acquisition date continues to apply.
2. Check your acquisition date: The critical date is when your purchase instrument was executed, not when you took possession or completed the transaction.
3. Consult professionals: Given the complexity of transitional rules, seek legal and tax advice for properties purchased before the policy change.

Market Impact and Future Outlook

The abolition of SSD has already begun reshaping Hong Kong’s property market. Following the announcement, market sentiment improved significantly, with developers actively launching new projects and transaction volumes showing signs of recovery. Industry analysts project that annual new home transactions could potentially increase by up to 50%, returning to the 10-year average of approximately 16,000 units.

What This Means for You

• Greater flexibility: No more planning your property sales around arbitrary holding periods
• Simplified calculations: Only one tax rate to consider (AVD Scale 2) instead of multiple overlapping duties
• Level playing field: All buyers—local or international—face the same tax treatment
• Market opportunities: Increased liquidity may create more buying and selling opportunities

The abolition of Hong Kong’s Special Stamp Duty marks a significant turning point in the city’s property market history. What was once a complex web of cooling measures has been replaced by a simplified, transparent tax structure that offers equal treatment for all buyers and unprecedented flexibility for property owners. Whether you’re a first-time buyer, seasoned investor, or international purchaser, understanding these changes is essential for making informed property decisions in today’s market. As always, consult with qualified professionals to navigate the specifics of your situation and stay informed about any future policy developments.