What happens when you inherit a property in Hong Kong? Do you face hefty stamp duty bills like property buyers? The good news is that Hong Kong offers one of the world’s most favorable inheritance tax environments. Since abolishing estate duty in 2006 and simplifying its property tax regime in 2024, inheriting property has become remarkably straightforward and tax-efficient. This guide explains exactly how stamp duty applies (or doesn’t apply) to inherited property, what documentation you need, and how to navigate the process smoothly.

Hong Kong’s Tax-Friendly Inheritance Landscape

Hong Kong stands out globally for its favorable tax treatment of inherited wealth. The territory abolished estate duty (inheritance tax) on February 11, 2006, making it one of the most attractive jurisdictions for estate planning and intergenerational wealth transfer. This means that when someone passes away in Hong Kong, their beneficiaries receive the full value of the estate without any tax deduction at the point of inheritance.

What Hong Kong Does NOT Tax

• Capital gains: No tax on property appreciation when inherited or sold
• Dividends: No withholding tax on dividends received
• Inheritance/estate duty: Abolished since February 2006
• Gift tax: No tax on gifts between individuals
• Sales tax/VAT/GST: Hong Kong has no consumption taxes

Stamp Duty Exemption for Inherited Property

While stamp duty typically applies to property transactions in Hong Kong, inherited property enjoys a special exemption. This means that when you receive property through inheritance, you don’t pay any stamp duty on the transfer from the deceased’s estate to you as the beneficiary.

Qualifying Inheritance Methods

The stamp duty exemption applies to property transferred through these three methods:

Current Stamp Duty Framework (2024-2025)

Hong Kong’s stamp duty regime underwent significant simplification in 2024. As of February 28, 2024, all special property duties have been abolished, leaving only Ad Valorem Stamp Duty (AVD) for property transactions.

Ad Valorem Stamp Duty (AVD) Rates

Abolished Duties (as of February 28, 2024)

The 2024-25 Budget announced the cancellation of all demand-side management measures for residential properties. These duties no longer apply:

• Buyer’s Stamp Duty (BSD): Previously 15% on property acquisitions by non-Hong Kong Permanent Residents
• Special Stamp Duty (SSD): Previously 10-20% based on holding period (aimed at short-term speculation)
• New Residential Stamp Duty (NRSD): Previously 15% on residential property acquisitions by Hong Kong Permanent Residents owning other residential property

Probate and Administration Requirements

To legally transfer property from a deceased’s estate in Hong Kong, you typically need a Grant of Representation. This is a court document that confirms the authority of the executor or administrator to deal with the estate assets.

Types of Grants Required

Exceptions to Grant Requirement

• Joint Tenancy: If property was owned as joint tenants, it automatically passes to the surviving joint tenant(s) upon proof of death with a death certificate – no grant required
• Small Estates: Under Section 15 of the Probate and Administration Ordinance, the Official Administrator may administer estates valued at HK$150,000 or less summarily without a grant application

Practical Scenarios and Considerations

Deeds of Family Arrangement

Recent Court of Appeal decisions have clarified that deeds of assent distributing property in accordance with intestacy laws do not attract stamp duty, representing a departure from previous Inland Revenue Department practice. However, if beneficiaries enter into voluntary arrangements to redistribute estate assets differently from what is specified in the will or intestacy laws, stamp duty implications may arise.

Step-by-Step Process for Inheriting Property

1. Step 1: Determine if a Grant is Required
   Check if the property was held as joint tenancy (no grant needed) or if the estate qualifies as a small estate under HK$150,000.
2. Step 2: Apply for Grant of Representation
   Submit application to the Probate Registry of the High Court with required documents including original will (if any), death certificate, and Schedule of Assets and Liabilities.
3. Step 3: Wait for Grant Issuance
   Processing typically takes 5-7 weeks once all requirements are satisfied and court fees paid.
4. Step 4: Register with Land Registry
   Submit sealed copy of the Grant to the Land Registry to update property records and transfer legal title.
5. Step 5: Complete Transfer to Beneficiary
   Execute deed of assent or transfer document to formally transfer property to beneficiary.

Hong Kong offers one of the world’s most favorable environments for inheriting property, with no inheritance tax and stamp duty exemptions for direct inheritances. The 2024 simplification of property duties has made the system even more straightforward. While the process requires proper documentation and sometimes court grants, the tax benefits are substantial. For complex estates or situations involving family arrangements, consulting with qualified legal and tax professionals ensures compliance and optimal outcomes.