Hong Kong Commercial Property Tax — Complete Guide

Property tax is charged at a flat rate of 15% on the net assessable value of the property. The net assessable value is the annual rent minus a statutory allowance of 20% for repairs and outgoings, giving an effective tax rate of 12% on gross rent received.

You cannot claim capital allowances on the building structure itself. However, you can claim wear and tear allowances on plant, machinery, and fixtures (e.g., air conditioning, lifts, fit-out). The initial allowance is 60% of qualifying expenditure in year 1, then 10–30% annual allowances thereafter under s.39C IRO.

Yes. Ad valorem stamp duty applies to commercial property, from a fixed duty of HK$100 at the lowest band up to 4.25% on the highest band, with marginal relief at each boundary. Commercial property has never been subject to Buyer's Stamp Duty or Special Stamp Duty, and since 28 February 2024 those duties no longer apply to residential property either, so the ad valorem rates for the two categories are now aligned.

This depends on your overall tax position, rental income level, and exit strategy. Personal ownership may offer lower effective rates at moderate income levels. Company ownership provides limited liability and may allow profits tax treatment. We model both scenarios for your specific situation.

Property tax losses (when expenses exceed rental income) can generally be carried forward and offset against future property income. They cannot be offset against salaries or profits from a different trade. However, if the property is part of a business, losses may be offsettable under the profits tax regime.

If you occupy part of a property yourself and let the remainder, only the rental portion is subject to property tax. You will need to apportion income and expenses on a fair basis, typically by floor area. IRD may challenge apportionments that appear contrived.