12. Mr. and Mrs. Lam purchased their first property in Wan Chai, in joint names, on...

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12. Mr. and Mrs. Lam purchased their first property in Wan Chai, in joint names, on 1 December 2017. The flat was rented out at HK$8,500 per month to their tenant, Mr. Wong, from 8 December 2017 to 7 December 2019. Total amount of rates paid by the couple on this flat was HK$7,500 for the year ended 31 March 2019. The couple borrowed a mortgage loan to purchase the flat and paid mortgage interest in the sum HK$150,000 during the year ended 31 March 2019. Additional Information: (1) Mr. and Mrs. Lam are both Hong Kong permanent residents ("HKPRs"). They are planning to acquire a property in Macau for long-term investment by renting it to their friend, Miss Chan, who is a HKPR and has a full-time job in Macau. (II) Mr. and Mrs. Lam recently sold their property in Wan Chai (see Note 12 above) to an unrelated person, Mr. Zheng, as introduced by a property agent. Mr. Zheng is not a HKPR. The date of the sale and purchase agreement was 10 December 2019, and the deed of assignment will be signed on 20 January 2020. (b) Based on the Additional Information (I) provided, advise Mr. Lam whether he and his wife are subject to: (i) Hong Kong Stamp Duty when acquiring the property in Macau and upon renting it to Miss Chan. (ii) Hong Kong Property Tax on the rental income to be received from Miss Chan. Briefly explain your advice given to Mr. Lam. (c) (2 marks) Based on the Additional Information (II) provided regarding the sale of the Wan Chai property to Mr. Zheng, determine: (i) (ii) the applicable stamp duty rate under Head 1(1A) of the Stamp Duty Ordinance ("SDO") on this transaction. Briefly explain your answer. whether this transaction is subject to Special Stamp Duty ("SSD") under the SDO. If yes, state the applicable SSD rate with brief explanation. If no, briefly explain your answer. (iii) whether Mr. Zheng is subject to Buyer's Stamp Duty ("BSD") under the SDO. If yes, state the applicable BSD rate with brief explanation. If no, briefly explain your answer. (3 marks) Conveyance or Property Value (whichever is higher) Up to $2,000,000 * $2,000,001 - $3,000,000 * $3,000,001 - $4,000,000 * $4,000,001 - $6,000,000 * $6,000,001 - $20,000,000 * Over $20,000,000 * * subject to marginal relief Stamp Duty Rates Buyer's Stamp Duty (BSD) New Rates (Scale 1) # w.e.f. 23 Feb 2013 erties, and Old Rates (Scale 2): when conditions. satisfied for Residential w.e.f. 26 Nov 2020 for Non-Residential Properties New Rates (Scale 1): w.e.f. 23 Feb 2013 for Residential /Non-Residential Properties # Flat Rate of 15%: w.e.f. 5 Nov 2016 for Residential Properties Lease with length of tenancy Not exceeding 1 year Between 1 to 3 years Exceeding 3 years Shares transfer 1.50% 3.00% 4.50% 6.00% 7.50% 8.50% Special Stamp Duty (SSD): Holding Period 6 months or less 20% > 6 months to 12 months 15% > 12 months to 24 months 10% > 24 months to 36 months 10% (Note A): For property acquired on or after 20 November 2010 to 26 October 2012 (Note B): For property acquired on or after 27 October 2012 SSD Rates (Note A) (where applicable) Old Rates (Scale 2) w.e.f. 1 April 2010 $100 1.50% 2.25% 3.00% 3.75% 4.25% 15% 10% 5% SSD Rates (Note B) (where applicable) 15% (w.e.f.27 October 2012, where applicable) 0.25% on total rent payable over lease term 0.5% on yearly or average yearly rent 1% on yearly or average yearly rent 0.2% (0.26% w.e.f. 1 August 2021) 12. Mr. and Mrs. Lam purchased their first property in Wan Chai, in joint names, on 1 December 2017. The flat was rented out at HK$8,500 per month to their tenant, Mr. Wong, from 8 December 2017 to 7 December 2019. Total amount of rates paid by the couple on this flat was HK$7,500 for the year ended 31 March 2019. The couple borrowed a mortgage loan to purchase the flat and paid mortgage interest in the sum HK$150,000 during the year ended 31 March 2019. Additional Information: (1) Mr. and Mrs. Lam are both Hong Kong permanent residents ("HKPRs"). They are planning to acquire a property in Macau for long-term investment by renting it to their friend, Miss Chan, who is a HKPR and has a full-time job in Macau. (II) Mr. and Mrs. Lam recently sold their property in Wan Chai (see Note 12 above) to an unrelated person, Mr. Zheng, as introduced by a property agent. Mr. Zheng is not a HKPR. The date of the sale and purchase agreement was 10 December 2019, and the deed of assignment will be signed on 20 January 2020. (b) Based on the Additional Information (I) provided, advise Mr. Lam whether he and his wife are subject to: (i) Hong Kong Stamp Duty when acquiring the property in Macau and upon renting it to Miss Chan. (ii) Hong Kong Property Tax on the rental income to be received from Miss Chan. Briefly explain your advice given to Mr. Lam. (c) (2 marks) Based on the Additional Information (II) provided regarding the sale of the Wan Chai property to Mr. Zheng, determine: (i) (ii) the applicable stamp duty rate under Head 1(1A) of the Stamp Duty Ordinance ("SDO") on this transaction. Briefly explain your answer. whether this transaction is subject to Special Stamp Duty ("SSD") under the SDO. If yes, state the applicable SSD rate with brief explanation. If no, briefly explain your answer. (iii) whether Mr. Zheng is subject to Buyer's Stamp Duty ("BSD") under the SDO. If yes, state the applicable BSD rate with brief explanation. If no, briefly explain your answer. (3 marks) Conveyance or Property Value (whichever is higher) Up to $2,000,000 * $2,000,001 - $3,000,000 * $3,000,001 - $4,000,000 * $4,000,001 - $6,000,000 * $6,000,001 - $20,000,000 * Over $20,000,000 * * subject to marginal relief Stamp Duty Rates Buyer's Stamp Duty (BSD) New Rates (Scale 1) # w.e.f. 23 Feb 2013 erties, and Old Rates (Scale 2): when conditions. satisfied for Residential w.e.f. 26 Nov 2020 for Non-Residential Properties New Rates (Scale 1): w.e.f. 23 Feb 2013 for Residential /Non-Residential Properties # Flat Rate of 15%: w.e.f. 5 Nov 2016 for Residential Properties Lease with length of tenancy Not exceeding 1 year Between 1 to 3 years Exceeding 3 years Shares transfer 1.50% 3.00% 4.50% 6.00% 7.50% 8.50% Special Stamp Duty (SSD): Holding Period 6 months or less 20% > 6 months to 12 months 15% > 12 months to 24 months 10% > 24 months to 36 months 10% (Note A): For property acquired on or after 20 November 2010 to 26 October 2012 (Note B): For property acquired on or after 27 October 2012 SSD Rates (Note A) (where applicable) Old Rates (Scale 2) w.e.f. 1 April 2010 $100 1.50% 2.25% 3.00% 3.75% 4.25% 15% 10% 5% SSD Rates (Note B) (where applicable) 15% (w.e.f.27 October 2012, where applicable) 0.25% on total rent payable over lease term 0.5% on yearly or average yearly rent 1% on yearly or average yearly rent 0.2% (0.26% w.e.f. 1 August 2021)

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ANSWER b Advice to Mr Lam on Hong Kong Stamp Duty and Property Tax i Hong Kong Stamp Duty when acquiring the property in Macau and upon renting it to ... View the full answer