[BUYING AND SELLING REAL ESTATE IN HONG KONG]
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duty implications will have to be carefully considered prior to entering into a sale and purchase transaction in relation to landed property: - Ad Valorem Duty (“AVD”) Effective from 11 am on 28 February 2024, the Government of HKSAR has announced that sellers and buyers of residential properties in Hong Kong are only required to pay ad valorem stamp duty (AVD) at the same rates as Scale 2 rates (from HK$100 up to 4.25% of the consideration). Any instrument executed between 25 October 2023 to 27 February 2024 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) at a flat rate of 7.5% of the consideration or value of the residential property, whichever is the higher, unless specifically exempted or provided otherwise. Any instrument executed between 5 November 2016 to 24 th October 2023 for the sale and purchase or transfer of residential property, either by an individual or a company would 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) at 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 the 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”) Effective from 28 February 2024, any instrument executed thereafter for the sale and purchase, or transfer of residential property is no longer subject to 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 between 27 October 2012 and 27 February 2024, 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% (for the period between 27 October 2012 and 24 October 2023) or 7.5% (for the period between 25 October 2023 and 27 February
ILN Real Estate Group – Buying and Selling Real Estate Series
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