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Hong Kong Property Tax - Scenarios involving solely-owned properties

1. I let a property on 1 July 2004 for $30,000 per month. Rates for the 3 quarters to 31 March 2005 paid by me amounted to $12,000. How is Property Tax computed for 2004/05? Do I have to pay Provisional Property Tax for 2005/06?


 


HK$


Rent for 9 months ($30,000 x 9)


270,000


Less: rates paid by owner


(12,000)


 


258,000


Less: 20% allowance for repairs and outgoings


(51,600)


Net assessable value (NAV)


206,400


2004/05 Property Tax @16%


33,024


Calculation of Provisional Property Tax for 2005/06 is based on the NAV for 2004/05, but grossed up to 12 months, as follows:


 


HK$


Estimated NAV ($206,400 [see above] x 12 / 9)


275,200


2005/06 Provisional Property Tax @16%


44,032


You will receive a Property Tax demand note that carries two components:


 


$


2004/05 Property Tax


33,024


2005/06 Provisional Property Tax


44,032


Total tax payable


77,056


2. My solely-owned property yielded a rental income of $30,000 per month until the tenant left on 31 May 2005. It was let again after 3 months' vacancy at a reduced monthly rental of $24,000. Can I apply to pay less property tax (or to holdover/defer payment of provisional tax)?


Yes, compared with that for 2004/05, your rental income for 2005/06 would be reduced by more than 10%. You can apply for a partial holdover of the provisional property tax on the grounds of rent reduction.


Your written application must be received by the Inland Revenue Department not later than 28 days before the due date for payment of the provisional tax, or 14 days after the issue of the relevant demand note, whichever is the later. The amount of provisional tax to be held-over would be $16,896 ($46,080 íV $29,184), computed as follows:


Amount of provisional tax demanded


HK$


Assessed assessable value ($30,000 x 12)


360,000


Less: 20% allowance for repairs and outgoings


(72,000)


Estimated NAV, per demand note


288,000


2005/06 Provisional Property Tax charged @16%


46,080



Computation for reduced tax (1/4-31/5/2005 and 1/9/2005-31/3/2006)


HK$


Estimated assessable value ($30,000 x 2 + $24,000 x 7)


228,000


Less: 20% allowance for repairs and outgoings


(45,600)


Estimated NAV


182,400


Revised 2005/06 Provisional Property Tax @16%


29,184


3. Can I apply for holdover of provisional tax on other grounds?


You may apply for complete or partial holdover of provisional tax within the time limit described above if any one of the following conditions can be satisfied:


  • a reduction in more than 10% of provisional year's estimated assessable value (please refer to the figures shown in the demand note);
  • you cease to own the property;
  • you have chosen the Personal Assessment and it would likely reduce your overall tax bill; or
  • you have raised an objection against the Property Tax assessment for the preceding year.


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