⚠ Property Tax vs Profits Tax: Critical Distinction
Many commercial property owners do not realise they may be subject to BOTH property tax (on rental income) AND profits tax (if trading in property or providing services). Getting this wrong can result in double taxation or missed deductions.
Common Challenges
Property Tax vs Profits Tax
Are you subject to property tax on rental income, profits tax on property trading, or both? The distinction matters enormously for your deductions and rates.
⚠ Risk: Wrong classification → missed deductions or double tax
Wear and Tear Allowances
You can claim initial and annual allowances on fixtures, plant, and equipment under s.39B/39C IRO. Many owners miss these significant deductions.
⚠ Risk: Unclaimed allowances → overpaying tax every year
Stamp Duty on Purchase
Ad valorem stamp duty on commercial property is up to 4.25%. For non-residents, additional consideration applies. Proper planning before purchase can reduce this.
⚠ Risk: No pre-purchase planning → unnecessary stamp duty costs
Vacant Property Deductions
Can you claim tax deductions for periods when your commercial property is vacant between tenants? Many owners do not claim correctly.
⚠ Risk: Missing vacancy deductions → overpaying property tax
Who Is This For?
Office building owners
Landlords of Grade A/B/C office space in Hong Kong.
Retail shop & mall landlords
Owners of street-level shops, shopping centre units, or F&B premises.
Industrial unit investors
Owners of factories, warehouses, and industrial properties.
Mixed-use property owners
Properties combining residential and commercial use with complex apportionment needs.
What We Do
Property Tax Return (BIR57/58)
Complete and file your annual property tax return with all legitimate deductions accurately claimed.
Including 20% statutory deduction on net rental income
Wear & Tear Allowance Claims
Identify and claim all eligible plant, machinery, and fixture allowances under the IRO.
S.39B/39C accelerated allowances for qualifying assets
Stamp Duty Planning
Pre-purchase stamp duty analysis and optimal ownership structure to minimise stamp duty exposure.
AVD, SSD, BSD analysis
Holding Structure Optimisation
Advise on optimal ownership vehicle — personal, company, partnership, or trust — for your property portfolio.
Considering total tax cost over holding period
How It Works
Property Portfolio Review
1 dayWe review all your commercial properties, rental agreements, and historical tax treatment.
Tax Position Analysis
2-3 daysDetermine property tax vs profits tax treatment, identify all eligible deductions.
Return Preparation
3-5 daysPrepare BIR57/BIR58 property tax returns with optimised deduction claims.
Annual Compliance
AnnuallyOngoing annual filing service with proactive planning for portfolio changes.
Case Studies
Office landlord — 5 units in Kowloon
- •Annual rental income HKD 4.2M
- •Previously unclaimed fit-out allowances identified
- •Property structure optimised
- •Back-year amendments filed
“Three years of unclaimed allowances recovered in one review.”
Retail shop investor — stamp duty planning
- •Purchase price HKD 28M
- •Pre-purchase structure planning
- •Buyer's Stamp Duty avoided via HK SPV
- •Total stamp duty reduced from 15% to 4.25%
“The pre-purchase consultation saved us almost HKD 1 million in stamp duty alone.”
Frequently Asked Questions
What is the property tax rate in Hong Kong?
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.
Can I claim capital allowances on commercial property?
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.
Is stamp duty charged on commercial property purchases?
Yes. Ad valorem stamp duty (AVD) applies at rates up to 4.25% for commercial property. Buyer's Stamp Duty (BSD) at 15% applies to non-permanent residents and companies. Special Stamp Duty (SSD) applies if you resell within 3 years of purchase.
Should I hold commercial property personally or through a company?
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.
Can I offset property losses against other income?
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.
What if I use part of a commercial property myself?
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.
専門的な税務サービスが必要ですか？
今すぐ専門チームにお問い合わせください。無料相談とお見積もりを提供いたします。個人・法人向けの香港税務サービスを幅広く提供しています。
無料相談
以下のフォームにご記入ください。24時間以内に専門チームがご連絡いたします。