Hong Kong – Property Taxes

What taxes and fees apply when buying a property in Hong Kong?

The principal government charge levied on a property acquisition in Hong Kong is the Ad Valorem Stamp Duty (AVD). AVD is payable on the great majority of property purchases and transfers, covering both residential and non-residential assets. The duty is assessed on either the agreed purchase price or the prevailing market value of the property, whichever is the greater of the two. Functionally, stamp duty in Hong Kong is comparable to transfer taxes levied in other markets — analogous to conveyancing stamp duty in certain Commonwealth countries or transfer tax in continental Europe — but Hong Kong’s framework is distinguished by its straightforward structure and relatively modest headline rates.

With effect from 26 February 2025, the Scale 2 AVD payable on the sale or transfer of both residential and non-residential properties begins at HK$100 for properties valued at up to HK$4 million, and reaches a ceiling rate of 4.25% for properties valued at HK$21,739,120 or more. Buyers should always verify current rate bands directly with the Hong Kong Inland Revenue Department (IRD), as the thresholds can be revised through the annual Budget.

Since 28 February 2024, all residential property transactions have been assessed under the progressive Scale 2 rates, bringing greater consistency and simplicity for purchasers. Prior to this change, a considerably higher flat-rate duty applied to a wide category of transactions, but this was removed as part of a broad reversal of demand-management measures.

Buyer’s Stamp Duty (BSD) — formerly a surcharge targeting certain residential acquisitions — now carries a 0% rate for transactions signed on or after 28 February 2024. Likewise, Special Stamp Duty (SSD) — originally designed to penalise the rapid resale of residential properties — currently stands at 0% for disposals occurring on or after 28 February 2024. Both duties remain part of Hong Kong’s legislative framework and could be reinstated; buyers should confirm their current status with the IRD at the point of purchase.

Hong Kong does not impose any value-added tax, goods and services tax, or sales tax. Consequently, there is no GST or VAT equivalent on new-build property purchases — a meaningful distinction from jurisdictions such as Australia, where GST applies to newly constructed residential property, or much of the European Union, where VAT charges are common on new developments.

Both the purchaser and the vendor are jointly and severally liable for AVD. In practice, it is customary for the buyer to discharge the AVD as part of completing the transaction. Conveyancing fees are payable by both parties to their respective solicitors and are agreed privately — as a rough guide, expect costs of approximately 0.1%–1% of the property value, though you should always obtain a specific fee estimate directly from your solicitor before proceeding.

Worked example (as of 2025)

Take a residential apartment purchased for HK$8 million. Under Scale 2 rates, AVD would be determined by the applicable rate band for that amount (the precise rate for HK$8 million falls in the mid-range of the scale — verify the exact figure with the IRD). At an approximate rate of 1.5%–2.25% for a property in that bracket, the AVD liability would be somewhere in the region of HK$120,000–HK$180,000. No BSD or SSD would apply to a purchase agreement signed after 28 February 2024. No VAT or sales tax would be levied. The buyer would also settle their own solicitor’s conveyancing fees separately. Always confirm current rate bands with the IRD stamp duty rates page prior to exchanging contracts.

What taxes and fees apply when selling a property in Hong Kong?

Hong Kong does not levy any transfer or turnover tax on property disposals. From the seller’s perspective, the most important point is that there is no dedicated vendor-side tax on disposing of real estate, beyond the shared stamp duty obligations. The absence of any capital gains tax — addressed in the following section — is a particularly significant advantage for property sellers in Hong Kong.

With effect from 28 February 2024, the demand-side management stamp duties, specifically Buyer’s Stamp Duty (BSD) and Special Stamp Duty (SSD), were abolished for all residential property transactions. This means that vendors disposing of a property after that date face no SSD exposure, irrespective of how briefly they have held the asset — a substantial shift from the earlier regime, under which properties sold within 36 months of purchase could attract SSD of as much as 20%.

Sellers in Hong Kong typically bear estate agency commissions, which generally run at around 1% of the sale price, though the rate is negotiable. Vendors are also responsible for their own conveyancing legal fees. Hong Kong operates under a common-law conveyancing system, so there is no equivalent of the notarial deed process found in civil-law countries such as France or Spain, and no associated notary fees.

Where the Inland Revenue Department determines that a seller’s property disposal activities amount to a trading operation rather than the realisation of a capital asset — for instance, where an individual repeatedly acquires and rapidly resells properties — any profits generated could be reclassified as trading income and brought within the scope of profits tax. This distinction is explored further in the capital gains tax section below. The great majority of individual sellers disposing of a single investment property will not encounter this issue.

How does capital gains tax work on property in Hong Kong?

Hong Kong imposes no capital gains tax whatsoever. This places the territory in the company of a select group of jurisdictions worldwide — among them Singapore and, for most assets, New Zealand — that do not tax the profit realised on the disposal of a property. For most individual property owners, the difference between what was paid for a property and what it is sold for is entirely outside the Hong Kong tax net.

Because Hong Kong has no capital gains tax, gains arising from the sale of real estate attract no tax liability, as long as the transaction is not treated as a trading activity. The pivotal distinction under Hong Kong law lies between a capital gain (which is not taxable) and a trading profit (which falls within the scope of profits tax).

While capital gains are not taxed, onshore profits from the disposal of assets can be characterised as trading gains and thereby subjected to profits tax. The IRD applies what are commonly known as the badges of trade when making this determination — taking into account factors such as transaction frequency, the buyer’s original intention at the time of purchase, the length of time the asset was held, and whether borrowing was arranged with a view to resale. Habitual “flipping” of property may lead the IRD to treat the activity as a trade, rendering the profits taxable.

Because there is simply no capital gains tax in existence, there is equally no indexation adjustment for inflation, no primary residence exemption, and no rollover or reinvestment relief — none of these concepts is applicable. There is also no distinction in treatment between residents and non-residents for capital gains purposes, since the tax does not exist for either group. Additionally, offshore rental income or gains arising from the disposal of overseas real estate held by a Hong Kong resident individual are generally outside the scope of Hong Kong taxation.

Worked example

Consider a property acquired for HK$5 million and sold five years later for HK$9 million, generating a gain of HK$4 million. Where the individual purchased the property as a genuine long-term investment and has not been engaged in frequent property trading, that HK$4 million gain is entirely free of tax in Hong Kong. The seller would pay AVD (shared with the buyer), agency commission of roughly 1%, and legal fees — but no capital gains tax of any kind. For current guidance on the distinction between trading and capital disposals, consult the Inland Revenue Department.

Are there any ongoing annual property taxes in Hong Kong?

Hong Kong has two forms of recurring property-related charge: Property Tax, which applies to rental income, and Rates, a government levy assessed on the estimated annual rental value of a property. These differ considerably from the capital-value-based annual property taxes found in countries such as the United States, where owners are charged each year on the assessed worth of their real estate regardless of whether it generates any income.

Property tax is charged to the owner of any land or buildings — other than government or consular properties — in Hong Kong at a standard rate of 15% on the net assessable value of such land or buildings. Crucially, a property occupied by its owner for personal use is not subject to property tax, because no rental income is received in respect of that property. This means that owner-occupiers incur no annual property tax at all — a considerable contrast to systems like council tax in the United Kingdom or municipal property levies across much of Europe, which apply to all residential occupiers regardless of ownership status.

Rates are an indirect tax charged on properties throughout Hong Kong. For domestic properties, rates are assessed at progressive rates of 5% on the first HKD 550,000 of rateable value, 8% on the next HKD 250,000, and 12% on any remainder. The rateable value represents the estimated annual open-market rent of the property at the designated valuation reference date of 1 October. Rates are payable by both owners and occupiers — including owner-occupiers — are administered by the Rating and Valuation Department, and are billed on a quarterly basis. Current rate bands should be confirmed with the Rating and Valuation Department.

The rateable value is periodically reviewed by the Rating and Valuation Department on the basis of prevailing open-market rental conditions. Unlike the infrequently updated capital assessments used as the basis for property taxes in some US jurisdictions, Hong Kong’s Rates system is more closely tied to rental market movements, making it more responsive to changing conditions.

Hong Kong has no net wealth or net worth taxes. Owning a property that has appreciated in value does not give rise to any annual charge on that unrealised gain, distinguishing Hong Kong from certain European jurisdictions that impose wealth-based surcharges on real estate holdings.

How does inheritance tax apply to property in Hong Kong?

Hong Kong levies neither estate duty nor gift tax. Estate duty — which was once charged on assets passing on death — was repealed in Hong Kong in February 2006. Since that date, property transferred from a deceased owner to their beneficiaries carries no inheritance or estate tax liability in Hong Kong, whatever the value of the estate involved.

The absence of any estate or gift tax stands in notable contrast to the approach taken in many other countries. In the United Kingdom, for instance, inheritance tax applies at 40% on estates exceeding the relevant threshold. In France, succession duties are imposed even between close relatives on a sliding scale. Hong Kong applies none of these charges.

Where property passes on death, the beneficiaries must navigate the legal process of obtaining either a Grant of Probate (where the deceased left a valid will) or Letters of Administration (where there is no will) through the Hong Kong courts. Professional and administrative costs arise in connection with this process, but these represent lawyers’ fees rather than taxes. Once the appropriate grant has been issued, the property may be transferred to the intended beneficiaries free of any inheritance tax liability.

Non-resident beneficiaries inheriting Hong Kong property are treated in exactly the same manner as resident heirs for Hong Kong tax purposes — no estate duty is payable by either group. However, non-resident heirs should be mindful that their own country of residence may impose succession or inheritance taxes on worldwide assets, depending on the rules of that jurisdiction. It is strongly advisable to seek guidance from a tax professional with expertise in both Hong Kong and the heir’s country of residence.

How does gift tax apply to property transfers in Hong Kong?

Hong Kong imposes no gift tax and no estate duty. Accordingly, transferring a property by way of gift — for example, to a child or other family member — does not attract any gift tax in Hong Kong. This sets Hong Kong apart from jurisdictions such as the United States, which operates a federal gift tax regime with annual and lifetime exclusions, or Germany, where gifts above specified thresholds are subject to tax. Hong Kong imposes no separate levy on gifted property.

Nonetheless, a gift of real property remains a transfer of immovable property and is therefore subject to AVD stamp duty on the same basis as an outright sale. AVD is calculated on whichever is the greater of any consideration passing or the open-market value of the property at the time of the transfer. This obligation arises regardless of whether any money actually changes hands. Both the person making the gift and the recipient are jointly and severally liable for the stamp duty due.

A limited number of exemptions exist — for example, certain intra-group transfers between associated companies may qualify for stamp duty relief, subject to the IRD’s prior approval. Transfers between spouses do not attract automatic exemption from stamp duty in Hong Kong, unlike in some other jurisdictions. Legal advice should always be obtained before gifting a property, as the stamp duty consequences can be substantial.

Non-residents who give or receive Hong Kong property as a gift are bound by the same AVD rules as residents, with no additional surcharge for non-resident donors or donees. That said, the gift may trigger gift or inheritance tax obligations in the donor’s or recipient’s home country — professional advice covering both jurisdictions is therefore essential.

How is rental income from property taxed in Hong Kong?

In Hong Kong, income derived from letting real property is taxed under property tax rather than under a general income tax framework, as is common in many other countries. This reflects a distinctive feature of the Hong Kong system: rather than aggregating all of an individual’s income and subjecting it to a single charge, Hong Kong taxes the three principal categories of individual income under separate regimes.

Property tax is charged on the owner of any land or buildings in Hong Kong at a standard rate of 15% on the net assessable value (NAV) of those assets. NAV is arrived at by taking the gross rent receivable, deducting any irrecoverable rent, deducting rates paid by the owner, and then applying a 20% statutory allowance. That 20% allowance functions as a fixed proxy for maintenance and outgoing expenses — no further deductions are permitted under property tax alone for actual repair costs, mortgage interest, or depreciation.

As a result, the effective maximum property tax rate on gross rental receipts is 12% (i.e. 15% applied to 80% of the relevant figure), though rates borne by the owner will further reduce the NAV before the 15% rate is applied.

Worked example (as of 2025)

An owner collects HK$30,000 per month in rent — HK$360,000 annually. Assuming the owner (rather than the tenant) pays rates of HK$12,000 per year:

• Gross rent: HK$360,000
• Less rates paid by owner: HK$12,000
• Less 20% statutory allowance on HK$348,000: HK$69,600
• Net assessable value (NAV): HK$278,400
• Property tax at 15%: HK$41,760

Always verify current computation rules with the IRD’s Property Tax guidance.

An individual’s residence status does not determine their liability to property tax. Both resident and non-resident landlords are taxed at the same flat 15% on the NAV of Hong Kong property they let out. There is no elevated withholding rate for non-residents, which is a feature in a number of other jurisdictions.

Where an individual receives rental income that does not constitute a business operation, the income falls within the property tax regime rather than profits tax. Property tax is levied at a flat rate of 15% on rental income after the standard 20% statutory deduction has been applied.

Individual property owners (as distinct from corporate landlords) have the option of electing for Personal Assessment, which may produce a more favourable outcome. Under Personal Assessment, the taxpayer may claim additional deductions — most notably mortgage interest paid on the property loan — against their overall assessed income, with the resulting liability calculated at progressive rates rather than the flat property tax rate. This can generate a meaningful tax saving for landlords carrying significant mortgage debt, as illustrated in the IRD’s own published worked examples. Personal Assessment is only available to individuals (not companies) who are ordinarily resident in Hong Kong or who hold the status of temporary resident.

If you receive rental income or a lump-sum premium from a property, you must report it in your Tax Return – Individuals (for solely owned property) or in a property tax return (for jointly or co-owned property). Short-term lettings — including those arranged through holiday rental platforms — are brought within the same property tax framework as conventional tenancies; Hong Kong has no separate regulatory or tax regime for short-term letting. Landlords are required to declare all rental income, including earnings from short lets. Property owners must retain adequate records — including tenancy agreements, rent receipts, proof of rates paid, and correspondence relating to lease changes and rent recovery — for a minimum period of seven years.

Are there any tax advantages or incentives for buying property in Hong Kong?

Hong Kong’s tax framework adopts a broadly neutral stance towards property ownership — there are no dedicated first-home buyer grants or stamp duty concessions of the kind found in Australia or the United Kingdom. That said, several features of the system can help to reduce the effective cost of owning property in the territory.

The 2025-26 Budget raised the maximum property value qualifying for the HK$100 stamp duty rate from HK$3 million to HK$4 million, with immediate effect from 26 February 2025. The intention was to ease the cost burden on buyers of lower-value residential and non-residential properties, and the change represents a genuine saving for purchasers of smaller homes and car parking spaces.

For landlords, the ability to elect for Personal Assessment enables individual property owners to offset mortgage interest payments against rental income when determining their overall tax position. Under this election, interest paid on a property loan during the year is deductible from the net assessable value, and the resulting income is then taxed at progressive rates rather than the flat 15% property tax rate. Where mortgage interest is high relative to rental receipts, this can deliver a significant reduction in tax liability, as demonstrated in worked examples published by the IRD.

For those who pay rent rather than own their home, the Inland Revenue (Amendment) (Tax Deductions for Domestic Rents) Ordinance 2022 introduced a deduction for domestic rent with effect from the year of assessment 2022/23. A taxpayer liable to salaries tax or tax under personal assessment may claim a deduction for rent paid under a qualifying tenancy of residential premises. This benefit is aimed at renters rather than property owners, but is relevant context for those weighing up whether to purchase or continue renting.

Hong Kong has actively expanded its network of Comprehensive Avoidance of Double Taxation Agreements with trading and investment partners, with the goal of relieving the tax burden on both individuals and businesses. These agreements may allow Hong Kong property tax paid by an owner resident in a treaty country to be credited against their home-country tax obligations. Check whether your country of residence has a double taxation agreement with Hong Kong via the IRD’s double taxation agreement page.

What are the tax implications for foreign nationals buying property in Hong Kong?

Hong Kong imposes relatively few additional taxes or restrictions specifically targeting overseas buyers, and the landmark reforms introduced in February 2024 substantially equalised the position for foreign purchasers. For residential property transactions executed on or after 28 February 2024, the applicable BSD rate was reduced to 0%, effectively eliminating the additional stamp duty surcharge that had previously applied to non-Hong Kong Permanent Resident (non-HKPR) buyers.

Before this reform, BSD represented a substantial extra cost. Between 27 October 2012 and 24 October 2023, non-HKPR buyers faced a BSD rate of 15% on top of other duties. The removal of BSD means that, from 2024 onwards, foreign nationals acquiring residential property in Hong Kong are subject to exactly the same AVD as local buyers — a significant reduction in the overall cost of entry.

There are generally no restrictions on foreign nationals purchasing property in Hong Kong — no ownership quotas or compulsory registration requirements apply to overseas buyers that differ from those affecting local purchasers. However, non-residents should be aware that obtaining a mortgage in Hong Kong may involve greater scrutiny from lenders, and the Hong Kong Monetary Authority (HKMA) regulates mortgage lending practices across all authorised institutions.

For most purposes, an individual’s residence status does not determine their Hong Kong tax liability — property tax on rental income applies at the same rate for both resident and non-resident landlords. Similarly, offshore rental income or gains from the disposal of overseas real estate by a Hong Kong resident individual are generally outside the scope of Hong Kong taxation. This territorial approach means that Hong Kong ordinarily taxes only income and gains with a local source.

Foreign nationals should be keenly aware that their home country’s tax legislation may require them to declare and pay tax on Hong Kong rental income, property gains, or even the value of the property itself, notwithstanding the absence of Hong Kong tax. Countries that tax on a worldwide basis — notably the United States, which subjects its citizens to US tax on global income — will require US persons to report and potentially pay US tax on earnings and gains from Hong Kong real estate. Double taxation agreements between Hong Kong and a number of jurisdictions may provide relief from double taxation. It is strongly recommended to consult a tax adviser who holds qualifications in both Hong Kong and your country of residence or citizenship before committing to a purchase.

Frequently Asked Questions

Do I pay capital gains tax if I sell my Hong Kong property as a non-resident?

No. Hong Kong does not impose capital gains tax on property — this applies equally to residents and non-residents. Gains from the sale of Hong Kong property are not taxable in Hong Kong, provided the IRD does not classify your activity as property trading. However, your home country may tax the gain under its own rules, so always check your domestic tax obligations and consult a qualified adviser. Verify current rules with the Hong Kong IRD.

Can I deduct mortgage interest on rental income in Hong Kong?

Not directly under property tax alone. The standard property tax computation permits only a 20% statutory deduction on net rent — actual mortgage interest payments are not deductible within this framework. However, individual landlords who are ordinarily resident in Hong Kong may elect for Personal Assessment, which allows mortgage interest to be set against the net assessable value before the resulting income is taxed at progressive rates. This can produce a meaningful saving. Companies are not eligible for Personal Assessment. Confirm eligibility with the IRD.

Is there a wealth tax on property in Hong Kong?

No. Hong Kong imposes no wealth tax or recurring annual levy based on the capital value of property held. There are no net wealth or net worth taxes in Hong Kong. The only recurring charge that bears any resemblance to an annual property tax is “Rates”, which is calculated on the estimated annual rental value (not the capital value) of the property and is payable by both owners and occupiers.

Is there inheritance tax or estate duty on Hong Kong property?

No. Hong Kong repealed its estate duty in February 2006, and no form of inheritance tax or estate duty has applied since that date. Property passing to beneficiaries on the death of an owner carries no Hong Kong tax liability, regardless of the property’s value or the relationship between the deceased and the recipient. Non-resident beneficiaries should verify whether their own country levies any tax on inherited overseas assets.

Do foreign nationals pay more stamp duty than permanent residents in Hong Kong?

As of 28 February 2024, no. The Buyer’s Stamp Duty (BSD) — which previously imposed an additional charge of up to 15% on non-Hong Kong Permanent Resident buyers — was reduced to 0% for all residential property transactions executed on or after that date. All buyers, regardless of residency status, now pay the same Ad Valorem Stamp Duty (AVD) under Scale 2 rates. Always confirm the current position with the IRD before proceeding, as stamp duty policy is subject to revision at each annual Budget.

How is stamp duty calculated on a Hong Kong property purchase?

Stamp duty (AVD) is calculated as a percentage of the higher of the transaction price or the open-market value of the property. As of 26 February 2025, Scale 2 rates begin at HK$100 for properties valued up to HK$4 million and increase progressively to a ceiling of 4.25% for properties valued at HK$21,739,120 or above. The specific rate bands within this range should be verified directly with the IRD’s stamp duty rates page, as the bands were revised in the 2025-26 Budget and further changes have been indicated for 2026.

Is rental income from short-term letting (e.g. through holiday platforms) taxed differently in Hong Kong?

No — Hong Kong has no separate tax regime for short-term or holiday lettings. All rental income received from Hong Kong property, whether arising from long-term tenancies or brief arrangements, is subject to property tax at a flat rate of 15% on the net assessable value (gross rent, less any rates paid by the owner, less a 20% statutory allowance). Landlords are required to report all rental income to the IRD, whatever the duration of the letting. Note also that short-term rentals may be subject to separate licensing or building management rules — it is advisable to check with your building management company and the relevant authorities.

Does Hong Kong have any double taxation treaties that affect property owners?

Yes. Hong Kong has entered into Comprehensive Avoidance of Double Taxation Agreements (CDTAs) with a number of countries. These treaties may permit property tax paid in Hong Kong to be credited against tax owed in your country of residence, thereby reducing the risk of the same rental income being taxed twice. The availability and scope of any relief will depend on the specific terms of the agreement between Hong Kong and your country. A full list of Hong Kong’s CDTAs is available from the IRD’s double taxation agreements page. Professional advice from a specialist familiar with both jurisdictions is strongly recommended.