[BUYING AND SELLING REAL ESTATE IN HONG KONG]
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Ad Valorem Duty (“AVD”) Unless specifically exempted or otherwise provided in the law, the sale and purchase or transfer of more than a single residential property under a single instrument executed on or after 12 April 2017 will be subject to AVD at a flat rate of 15% of the consideration or value of the residential property, whichever is the higher. Any instrument executed on or after 5 November 2016 for the sale and purchase or transfer of residential property, either by an individual or a company will be subject to AVD at the rate set out under “Part 1 of Scale 1” under Schedule 1 to the Stamp Duty Ordinance (Cap.117) (i.e., a flat rate of 15% of the consideration or value of the residential property, whichever is the higher), unless specifically exempted or provided otherwise. Part 1 of Scale 1 does not apply to an agreement /conveyance for a residential property where the purchaser/transferee is a Hong Kong permanent resident (“HKPR”) (or he/she is a tenant or an authorized occupant of the Housing Authority who acquires the residential property under the Tenants Purchase Scheme) acting on his/her own behalf and does not own any other residential property in Hong Kong at the time of acquisition of the subject property. In those circumstances, only the rate set out under “Scale 2” under Schedule 1 to SDO (i.e., a rate ranging from $100 to 4.25% of the consideration or value of the residential property, whichever is higher) will apply to such agreement/conveyance. Any agreement executed on or after 26 November 2020 for the sale and purchase or transfer of non-residential property, either by an individual or a company will be subject to AVD at the rate set out under “Scale 2” under Schedule 1 to SDO (i.e., a rate ranging from
$100 to 4.25% of the consideration or value of the residential property, whichever is the higher), unless specifically exempted or provided otherwise. While it is typical for the purchaser to agree to bear the AVD, it is important to note that under the Hong Kong law, the purchaser, the vendor, and any person who uses the instrument will be jointly and severally liable to pay AVD, irrespective of any agreement to the contrary made between them. Buyer’s Stamp Duty (“BSD”) Unless specifically exempted or provided otherwise, BSD is chargeable on an agreement/conveyance for the sale and purchase or transfer of any residential property acquired on or after 27 October 2012, except where the purchaser or transferee is a HKPR acquiring the subject property on his/her own behalf. It is the purchaser (not the vendor) who is liable to pay BSD, the rate of which is 15% of the consideration or value of the residential property, whichever is higher. Special Stamp Duty (“SSD”) SSD is chargeable on a transaction involving the sale and purchase or transfer of a residential property if the subject property is acquired on or after 27 October 2012 and resold within 36 months after acquisition. The rate of the SSD payable varies from 10% to 20% of the consideration or value of the residential property, whichever is higher, depending on when the subject property was resold within those 36 months. The purchaser and the vendor to the property transaction and any person who uses the instrument will be jointly and severally liable to pay SSD. Sale and Purchase of Property by way of Transfer of Shares On the other hand, it has now gradually become a common practice for potential
ILN Real Estate Group – Buying and Selling Real Estate Series
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