Hong Kong Mortgage Interest Tax Deduction — Homeowner & Investor Guide

Under s.26E IRO, you can deduct actual home loan interest paid, up to a maximum of HKD 100,000 per year. This deduction is available for up to 20 years total (not necessarily consecutive). The property must be your principal place of residence in the relevant year of assessment.

Yes. For a joint mortgage, each mortgagor can claim their proportionate share of the interest, up to HKD 100,000 each. If your spouse is not using their full deduction entitlement (e.g., they have lower salaries income), it may be worth reviewing the mortgage documentation to ensure the split is optimised — though the allocation must reflect the actual legal borrowing positions.

No. Years in which the property is not your principal place of residence (including years when it is let to a tenant) do not count toward the 20-year total. This means your deduction clock effectively pauses during rental periods. However, during those rental years, you may be able to deduct the mortgage interest against your rental income instead (under s.42(1) IRO), which is a different and often more valuable deduction.

The s.26E deduction only applies to your principal place of residence. If you own two properties, only the one you genuinely occupy as your principal residence qualifies. Interest on a second property mortgage is not deductible under s.26E, but may be deductible against rental income if the second property is let out.

Only if the top-up loan proceeds are used exclusively for acquiring or improving the qualifying property. If you take a top-up loan to fund a holiday, invest in stocks, or pay other expenses, that portion of interest does not qualify for the s.26E deduction. Keeping the loan proceeds use clearly documented is essential.

The home loan interest deduction under s.26E applies to salaries tax and, if the taxpayer is assessed jointly (personal assessment), may reduce the joint assessment liability. If you are assessed purely under profits tax (as a sole trader), the s.26E relief may still be available by electing personal assessment, which aggregates all income and applies the salaries tax deductions. This is often beneficial for self-employed individuals with moderate profits.