Imagine buying a HK$7 million property in Hong Kong and saving over HK$750,000 in taxes compared to just one year ago. That’s the reality for property investors today, thanks to Hong Kong’s historic 2024 stamp duty reforms. With the abolition of the “spicy taxes” that had burdened the market for 13 years, Hong Kong has transformed into one of Asia’s most investor-friendly property markets. But what exactly changed, and how can you maximize these new opportunities while navigating the remaining exemptions and reliefs?

The 2024 Stamp Duty Revolution: What Actually Changed

On February 28, 2024, Hong Kong implemented the most significant property tax reforms in over a decade through the Stamp Duty (Amendment) Ordinance 2024. These changes came in response to challenging market conditions, with residential property prices falling 7% in 2023 and transaction volumes declining to historically low levels. The government took decisive action to revitalize the property sector by removing the regulatory measures commonly known as “spicy taxes.”

The Three Major Abolitions

The reforms eliminated three major stamp duty categories that had previously imposed substantial financial burdens:

• Buyer’s Stamp Duty (BSD): Previously charged at 15% on residential property acquisitions by non-Hong Kong permanent residents and corporate entities – now abolished
• Special Stamp Duty (SSD): Previously imposed rates up to 20% on properties resold within 24 months of acquisition – now completely abolished with no minimum holding period requirements
• New Residential Stamp Duty (NRSD): Previously applied at 15% to Hong Kong permanent residents acquiring additional residential properties – now eliminated entirely

Understanding Ad Valorem Stamp Duty (AVD): The New Unified System

With the abolition of BSD, SSD, and NRSD, Ad Valorem Stamp Duty now stands as the primary property transfer tax in Hong Kong. All residential and non-residential property transactions are subject exclusively to AVD at Scale 2 rates, creating a progressive tax structure based on property value.

Current AVD Scale 2 Rate Structure (2024-2025)

Real-World Examples: How Much You’ll Actually Pay

Let’s examine how these rates translate into actual savings for different property types:

Example 1: Mid-Range Residential Property
Property value: HK$7,000,000
AVD payable: HK$7,000,000 × 3% = HK$210,000

Example 2: Entry-Level Property
Property value: HK$2,800,000
AVD payable: HK$100 (flat rate for properties under HK$3 million)

Example 3: Luxury Property
Property value: HK$25,000,000
AVD payable: HK$25,000,000 × 4.25% = HK$1,062,500

Strategic Stamp Duty Exemptions: Your Path to Maximum Savings

While AVD now applies uniformly to most property transactions, Hong Kong’s stamp duty legislation provides several important exemptions and reliefs that savvy investors can leverage for significant tax savings. Understanding these can make the difference between a good investment and a great one.

1. Close Relative Nomination Exemption

One of the most valuable exemptions applies to property nominations involving close relatives. When a property purchaser nominates a close relative to take ownership, additional AVD can be avoided if specific conditions are met.

Qualifying Criteria:

• The nominee must be a close relative: parent, spouse, child, brother, or sister (including blood relations, half-blood relations, adoptive, and step relationships)
• The nominee must be acting on their own behalf (not as a nominee for another party)
• The nominee must not own any other residential property in Hong Kong at the time of nomination
• The nomination must be documented properly through legal instruments

2. Estate and Inheritance Transfers

Transfers of property to beneficiaries of a deceased person’s estate represent another significant exemption category. These transfers are exempt from AVD when structured correctly:

• Testamentary transfers: Property transferred according to a valid will
• Intestacy transfers: Property distributed according to Hong Kong’s intestacy laws
• Executor transfers: Property conveyed by estate executors to rightful beneficiaries

3. Charitable Institution Exemption

Charitable institutions that qualify for tax exemption under Section 88 of the Inland Revenue Ordinance enjoy complete exemption from stamp duty on property acquisitions. This exemption applies to:

• Registered charities with valid Section 88 tax exemption status
• Property used for charitable purposes
• Both residential and non-residential property transfers

Corporate Property Investment: Advanced Strategies

Corporate structures present unique opportunities and considerations for property investors under Hong Kong’s stamp duty regime, particularly following the 2024 reforms. The differential between property transfer stamp duty and share transfer stamp duty creates powerful tax planning opportunities.

Direct Property Purchase vs. Share Acquisition Strategy

One sophisticated strategy involves acquiring shares of a company holding property rather than purchasing the property directly. This approach leverages the significant rate differential:

Section 45 Relief: Intra-Group Property Transfers

Section 45 of the Stamp Duty Ordinance provides relief for property transfers between associated bodies corporate, commonly used in corporate restructuring and group reorganizations.

Qualifying Requirements:

• Both transferor and transferee must be associated bodies corporate
• One company must beneficially own at least 90% of the issued share capital of the other, OR
• Both companies must have a common corporate shareholder owning at least 90% of each company’s issued share capital
• The association must exist at the time of transfer

Stock Market and REIT Opportunities

Reduced Stock Transfer Stamp Duty

Effective November 17, 2023, Hong Kong reduced stock transfer stamp duty from 0.13% to 0.1% per party (0.2% total) on the consideration or market value of Hong Kong stocks, whichever is higher. This reduction aimed to boost trading volumes and maintain Hong Kong’s competitiveness as a global financial center.

How It Works:

• Buyer pays: 0.1% stamp duty on purchase
• Seller pays: 0.1% stamp duty on sale
• Total duty: 0.2% of transaction value
• Duty applies to both bought notes and sold notes

REIT Stamp Duty Exemption (December 2024)

In a significant development for real estate investors, Hong Kong introduced a complete stamp duty waiver for transfers of Real Estate Investment Trust (REIT) shares and units, effective December 21, 2024.

Impact:

• Eliminates the previous 0.2% (0.1% per party) stamp duty burden on REIT transactions
• Reduces investment costs and enhances REIT market liquidity
• Aligns Hong Kong with other financial centers offering favorable REIT taxation
• Makes REITs more attractive for both institutional and retail investors

Compliance Essentials: What You Must Know

Stamping Requirements and Deadlines

Hong Kong stamp duty law imposes strict compliance requirements with penalties for late stamping:

• Property transactions: Instruments must be stamped within 30 days of execution
• Share transfers: Contract notes must be stamped within the prescribed timeframe
• Penalty for late stamping: Additional fees and interest may apply
• Unstamped instruments: Not admissible as evidence in Hong Kong courts

Valuation and Anti-Avoidance Provisions

For stamp duty purposes, the Inland Revenue Department (IRD) assesses duty based on:

• Stated consideration in the instrument, or
• Market value of the property, whichever is higher

Hong Kong’s stamp duty legislation includes robust anti-avoidance provisions targeting artificial arrangements designed solely to minimize stamp duty. The IRD scrutinizes circular transactions with no commercial substance, nominee arrangements not meeting exemption requirements, and corporate structures created primarily for stamp duty avoidance.

Strategic Planning in the New Era

Timing Considerations Post-Reform

The February 28, 2024 reforms have fundamentally altered investment timing strategies:

• No More Holding Period Requirements: With SSD abolished, investors can sell properties at any time without penalty, enabling more responsive portfolio management
• Immediate Market Entry: Non-residents and corporate buyers can now enter the Hong Kong property market without the previous 15% BSD penalty
• Portfolio Diversification: No NRSD penalty for acquiring multiple properties enables more sophisticated portfolio approaches

International Investor Opportunities

The elimination of BSD has particularly significant implications for international investors:

• Non-residents now face the same stamp duty as local buyers
• No penalty for foreign corporate ownership structures
• Enhanced competitiveness of Hong Kong property relative to other Asian markets
• Simplified tax planning without complex BSD mitigation strategies

Hong Kong’s 2024 stamp duty reforms represent a fundamental transformation of the property tax landscape, creating unprecedented opportunities for both local and international investors. The abolition of the “spicy taxes” has eliminated historical barriers while maintaining reasonable transfer tax revenue. For property investors, success in this new environment requires understanding not only the simplified rate structure but also the strategic exemptions and corporate structuring opportunities that can further optimize tax efficiency. As Hong Kong’s property market adjusts to these historic reforms, investors who understand the nuances of the current stamp duty regime will be best positioned to capitalize on the opportunities created by this more level, accessible, and investor-friendly regulatory environment.