⚠ Many HK Landlords Miss the Personal Assessment Election
Property tax is charged at a flat 15%. But if you have a mortgage or other losses, electing Personal Assessment consolidates all your income under salaries tax rates, allowing mortgage interest as a deduction. At lower income levels, this can reduce your effective tax rate substantially — yet most landlords never make this election.
Common Challenges
Calculating Net Assessable Value
Property tax is assessed on your rental income less rates paid by you and less a 20% statutory allowance. Getting this wrong means either overpaying or underpaying.
⚠ Risk: Incorrect NAV → IRD assessment + interest
Mortgage Interest Deduction
Under property tax alone, mortgage interest is NOT deductible. You must elect Personal Assessment to claim mortgage interest against rental income.
⚠ Risk: Paying 15% flat rate instead of effective 5–10% → significant overpayment
Joint Ownership Complications
Co-owners must each declare their proportionate share of rental income, and the election for Personal Assessment must be made individually.
⚠ Risk: Incorrect share reporting → IRD query on both parties
Tenancy Agreement Compliance
All tenancy agreements should be stamped (Stamp Duty) and deposits correctly treated — IRD cross-checks stamp duty records against property tax returns.
⚠ Risk: Unstamped tenancy → Stamp Duty penalty + tax inquiry
Who Is This For?
HK residents renting out a property
Individuals renting out one or more HK properties and receiving assessable rental income.
Landlords with mortgages on rental properties
Those paying mortgage interest who should be electing Personal Assessment to claim that interest.
Joint property owners
Co-owners navigating the proportionate income declaration requirements.
Expatriates with HK investment properties
Non-residents owning HK property and earning rental income subject to HK property tax.
Landlords with multiple properties
Portfolio landlords needing consolidated tax planning across multiple rental units.
Accidental landlords
Owners who inherited property or moved overseas and are now renting out their former home.
What We Do
Net Assessable Value Calculation
We calculate your NAV correctly — rental income less rates, less 20% statutory deduction.
Including treatment of premiums, deposits, and fitting-out contributions
Personal Assessment Election
We assess whether Personal Assessment saves you tax and file the election (BIR60 with elected boxes) accordingly.
Critical for landlords with mortgages or employment losses
Property Tax Return Filing
We complete and file your BIR57 (or BIR58 for jointly owned property) accurately and on time.
Including all supporting schedules for multiple properties
Stamp Duty Compliance
We verify your tenancy agreements are correctly stamped and advise on stamp duty rates.
Ad valorem stamp duty on leases based on annual rent
Property Tax vs Profits Tax Review
For landlords operating at scale, we review whether a corporate structure is more tax-efficient.
Particularly relevant for 3+ properties or HKD 2M+ annual rent
How It Works
Rental Income Review
1 dayWe collect tenancy agreements, rental receipts, rates bills, and mortgage statements.
NAV Calculation & Election Analysis
1–2 daysWe calculate your property tax liability and model the Personal Assessment alternative.
Return Preparation
2–3 daysWe prepare BIR57/BIR58 and any accompanying BIR60 election, with full workings provided.
Filing & IRD Liaison
As requiredWe file your return and respond to any IRD queries or assessments on your behalf.
Case Studies
Salaried professional with one mortgaged rental property
- •Annual rent received HKD 300,000
- •Mortgage interest paid HKD 120,000
- •Without Personal Assessment: tax HKD 36,000
- •With Personal Assessment: tax HKD 0 (losses absorbed)
“I never knew about Personal Assessment. TAX.hk saved me the entire property tax bill.”
Portfolio landlord with 3 HK properties
- •Total annual rent HKD 840,000
- •Mortgage interest across all 3 properties HKD 380,000
- •Correct NAV calculations filed
- •Personal Assessment election reduced effective rate to 8.2%
“The mortgage interest deduction through Personal Assessment transformed my after-tax rental yield.”
Frequently Asked Questions
What is the 20% statutory deduction for property tax?
Under s.5B of the IRO, a standard 20% deduction is allowed from your net rental income (after rates deduction) to cover repairs, insurance, and management expenses. You do not need to prove actual costs — the 20% is allowed automatically. This means effective property tax on gross rent is approximately 12% (15% × 80%).
Can I deduct my mortgage interest from property tax?
Not under property tax itself — the IRO does not allow mortgage interest as a deduction from property tax assessable value. However, if you elect Personal Assessment, your rental income is assessed alongside your other income under salaries tax rates, and mortgage interest on the rental property becomes deductible. This is usually more beneficial for mortgaged properties.
My tenant pays rates. Do I still include them in rental income?
If your tenant pays the rates directly to the Rating and Valuation Department, they are excluded from your rental income calculation. If you collect rates as part of the rent, you deduct the rates element from your gross rental income to arrive at the figure before the 20% statutory deduction.
I own a property with my spouse 50/50. How do we file?
Each co-owner declares their 50% share of the rental income in their individual property tax return. Each person can independently elect Personal Assessment based on their own circumstances. We coordinate joint returns to ensure both owners' positions are consistent and optimally structured.
What if my property was vacant for part of the year?
Only the period when the property was rented generates assessable rental income. Vacant periods do not give rise to a tax liability, but you should be able to demonstrate the vacancy (e.g., estate agent records, utility bills showing low or no usage) if queried by the IRD.
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