Imagine purchasing a HK$10 million luxury apartment in Hong Kong and saving HK$750,000 to HK$1.5 million in taxes compared to just a year ago. This is the new reality for non-resident investors following Hong Kong’s landmark decision to abolish all property cooling measures. In a dramatic policy shift, the government removed Buyer’s Stamp Duty (BSD) and other demand-side restrictions on February 28, 2024, creating unprecedented opportunities for international property investors. Let’s explore what this means for your investment strategy and how to maximize the benefits of Hong Kong’s newly liberalized property market.

The End of an Era: BSD Abolished After 13 Years

Hong Kong’s property market has undergone a seismic transformation. On February 28, 2024, Financial Secretary Paul Chan announced the complete removal of all demand-side management measures, including the Buyer’s Stamp Duty (BSD) that had been in place since October 2012. The Stamp Duty (Amendment) Ordinance 2024 was subsequently gazetted on April 19, 2024, making the abolition official with retroactive effect from February 28, 2024.

Why BSD Was Introduced and Why It’s Gone

Originally implemented in October 2012, BSD was designed to cool Hong Kong’s overheated property market by imposing a 15% surcharge on non-permanent residents and corporate buyers. The government aimed to prioritize home ownership for Hong Kong residents and curb speculative activity. However, by 2024, market conditions had reversed dramatically. Property prices had fallen to 2016 levels, transactions had slowed significantly, and the government recognized that cooling measures were no longer appropriate for a market needing stimulation rather than restraint.

Current Stamp Duty Framework: What Non-Residents Pay Now

Starting from February 28, 2024, Hong Kong eliminated all differential treatment based on residency status, property type, or buyer’s legal form. All property buyers—whether Hong Kong permanent residents, non-permanent residents, foreign nationals, or corporate entities—pay exactly the same stamp duty rates.

Ad Valorem Stamp Duty (AVD) – Scale 2 Rates

The only stamp duty now applicable to residential property purchases is Ad Valorem Stamp Duty (AVD) at Scale 2 rates. These progressive rates are significantly lower than the previous combined BSD and AVD charges:

Real-World Cost Savings: Before vs. After BSD Abolition

The financial impact of BSD abolition is substantial. Let’s examine concrete examples to understand the dramatic cost reduction for non-resident investors:

Example 1: HK$5 Million Apartment Purchase

• Before February 28, 2024: BSD at 7.5% = HK$375,000 + AVD at Scale 2 rates
• Before October 2023: BSD at 15% = HK$750,000 + AVD at Scale 2 rates
• After February 28, 2024: AVD only = Approximately HK$112,500 (2.25% of HK$5 million)
• Total Savings: HK$262,500 to HK$637,500

Example 2: HK$20 Million Luxury Property

• Before February 28, 2024: BSD at 7.5% = HK$1,500,000 + AVD at 3.75% = HK$750,000
• Before October 2023: BSD at 15% = HK$3,000,000 + AVD at 3.75% = HK$750,000
• After February 28, 2024: AVD only = HK$750,000 (3.75% of HK$20 million)
• Total Savings: HK$750,000 to HK$3,000,000

Other Abolished Measures: Complete Market Liberalization

BSD wasn’t the only property cooling measure removed. The government abolished all demand-side restrictions, creating a completely level playing field:

• Special Stamp Duty (SSD): Previously imposed penalties on sellers who disposed of residential properties within 24 months of acquisition, with rates ranging from 10% to 20%
• New Residential Stamp Duty (NRSD): Previously charged Hong Kong permanent residents 15% (later reduced to 7.5%) when purchasing a second or subsequent residential property
• All Differential Treatment: No distinction between residential and non-residential properties, first-time and subsequent buyers, or individual and corporate purchasers

Market Response and Investment Opportunities

The abolition of BSD and other cooling measures has revitalized Hong Kong’s property market. According to market data and government reports:

• Transaction Volume Increase: Property transactions surged following the February 28 announcement, with some reports indicating double-digit percentage increases
• Mainland Chinese Buyers Return: Non-resident buyers, particularly from mainland China, have returned to the market in significant numbers
• Developer Activity: Major developers have accelerated new project launches, taking advantage of improved market sentiment
• Price Stabilization: While prices remain below peak levels, the market has shown signs of stabilization following the policy change

Strategic Considerations for Non-Resident Investors

With BSD abolished, non-resident investors should consider these strategic factors when evaluating Hong Kong property investments:

1. Timing Advantage: The current market represents a historic opportunity with reduced entry costs and potentially favorable pricing
2. Flexible Holding Periods: With SSD abolished, there are no penalties for short-term holdings, allowing greater strategic flexibility
3. Corporate Structures: Corporate ownership is now equally tax-efficient as individual ownership, enabling optimal investment structuring
4. Due Diligence: While tax costs have decreased, comprehensive property due diligence remains essential for successful investments
5. Financing Considerations: Explore mortgage options available to non-residents, which may have different requirements than for local buyers

Step-by-Step: Calculating Your Stamp Duty Obligations

Follow this simple process to determine your exact stamp duty liability for any Hong Kong property purchase:

1. Determine Property Value: Identify the higher of the purchase price or official market valuation
2. Apply Scale 2 Rates: Use the AVD Scale 2 table above to find the applicable rate for your property value
3. Calculate Duty: Multiply the property value by the applicable percentage rate (or use the fixed amount for properties under HK$3 million)
4. Payment Deadline: Submit payment to the Inland Revenue Department within 30 days of executing the sale and purchase agreement
5. Document Stamping: Ensure all transaction documents are properly stamped with the IRD to complete the legal transfer

Hong Kong’s Competitive Advantage in the Global Market

With BSD abolished, Hong Kong now offers one of the most competitive property tax regimes among major global cities. Compare this to other financial centers:

• Singapore: Maintains Additional Buyer’s Stamp Duty (ABSD) of 20-60% for foreigners
• London: Non-residents pay 2% surcharge on top of standard stamp duty rates
• Vancouver: Foreign buyers face 20% tax on residential purchases
• Hong Kong: No foreign buyer surcharge, maximum 4.25% AVD for all buyers

This competitive positioning makes Hong Kong particularly attractive for international investors seeking exposure to Asian property markets without punitive tax burdens.

Hong Kong’s abolition of Buyer’s Stamp Duty represents a watershed moment for international property investors. The removal of this 13-year-old barrier has not only reduced transaction costs by up to 15% but has also signaled the government’s commitment to revitalizing the property market and maintaining Hong Kong’s competitiveness as a global financial hub. For non-resident investors, this creates unprecedented opportunities to access one of the world’s most dynamic property markets on equal terms with local buyers. As with any significant investment, thorough due diligence and professional advice remain essential, but the path to Hong Kong property ownership has never been more accessible or financially attractive.