Property Tax Overview in Hong Kong

Hong Kong imposes three distinct annual property charges and one transactional charge. The annual charges are Property Tax (on rental income), Rates (on property occupation), and Government Rent (on leasehold tenure). The transactional charge is Ad Valorem Stamp Duty (AVD). Understanding how these interact is the starting point for any property owner or prospective buyer in the territory.

What is Property Tax and who pays it?

Property Tax is levied under the Inland Revenue Ordinance (Cap 112) and administered by the Inland Revenue Department (IRD). It applies to every owner of Hong Kong-situs property that is let to a tenant and produces rental income -- whether the property is residential, commercial, or industrial. The rate is a flat 15% of the net assessable value (NAV) for the 2025/26 assessment year.[1] Owner-occupiers who live in their own property without collecting rent have no Property Tax liability on that property: the IRD treats absence of rental income as absence of a chargeable event.[1] Where a property is partially let and partially self-occupied, tax applies only to the letting portion.

How is net assessable value calculated?

The NAV formula has two steps. First, any Government Rates agreed and actually paid by the owner during the year are deducted from gross rental income. Second, a statutory allowance of 20% of the resulting figure is granted automatically for repairs and outgoings -- owners cannot substitute actual repair costs, management fees, or insurance for this allowance under the Property Tax charge.[1][2] No deduction is available for mortgage interest under Property Tax; however, mortgage interest may be deductible if the owner elects Personal Assessment (described below).

A worked example using HKD figures:

Owners who believe their actual deductible expenses exceed the flat-rate benefit may elect Personal Assessment. Under Personal Assessment, all income -- including NAV -- is aggregated and taxed at progressive Salaries Tax rates, with mortgage interest and additional allowances available as deductions.[1] The IRD automatically compares both outcomes and applies the more favourable result, so election carries no penalty if the standard rate proves better.

What are Rates and Government Rent?

Rates are levied under the Rating Ordinance (Cap 116) and administered by the Rating and Valuation Department (RVD). They apply to the occupation -- not the ownership -- of property. The charge is a percentage of the property's rateable value, which the RVD defines as the estimated annual open-market rental value of the property at a fixed valuation reference date.[3] For 2026/27, the rates charge for non-domestic tenements is a flat 5% of rateable value, payable quarterly in advance.[3] Domestic tenements apply a progressive structure effective January 2025: 5% on the first HKD 550,000 of rateable value, 8% on the next HKD 250,000, and 12% on the portion exceeding HKD 800,000 -- though the RVD notes approximately 98% of private domestic units fall within the 5% band.[3] Both owner and occupier are in principle liable, but in the absence of a contrary lease term, liability rests with the occupier.

Government Rent is charged at 3% of the rateable value and is levied on the owner of the lot (not merely the occupier) regardless of whether the property is occupied or vacant.[3] It arises from the leasehold structure of most Hong Kong land: land is Crown (now Government) Grant tenure, and Government Rent is the ongoing ground-rent component of that grant.

How did the February 2024 stamp-duty abolition change the market?

From 28 February 2024, the Financial Secretary abolished all three demand-side management stamp duties that had been in place since 2010-2013: the Buyer's Stamp Duty (BSD, previously 15% on non-HKPR and corporate buyers), the Special Stamp Duty (SSD, 5-20% on disposals within a 3-year holding period), and the New Residential Stamp Duty (NRSD, previously 15% on HKPR buyers acquiring a second or subsequent residential property).[4][5] The Stamp Duty (Amendment) Ordinance 2024 was passed by the Legislative Council on 10 April 2024, giving permanent legislative effect to the abolition.[5]

The only stamp duty that now applies to all Hong Kong property transactions -- residential and non-residential, buyer of any residency status -- is Ad Valorem Stamp Duty (AVD) at Scale 2. The Scale 2 rates range from HKD 100 (flat) on consideration up to HKD 4,000,000 to 4.25% on consideration above HKD 21,739,120.[4][5] There is no longer any differentiation between Hong Kong permanent residents and non-permanent residents, or between first and subsequent property purchases. This represents an approximate 75% reduction in total stamp-duty cost for a foreign buyer acquiring a mid-range residential property compared with the pre-2024 regime.[5] The Hong Kong country overview sets out the broader tax framework within which these property charges sit.

Can Personal Assessment reduce a landlord's Property Tax bill?

Personal Assessment is an election available to individuals who are ordinarily resident or temporarily resident in Hong Kong.[1] When elected, the IRD aggregates the taxpayer's assessable income from property, salaries, and sole-proprietorship profits, then applies the progressive Salaries Tax rate schedule (capped at the 15% standard rate) with all personal allowances and mortgage-interest deductions available.[1] For a landlord with significant mortgage interest, dependant allowances, or other deductions, Personal Assessment can produce a lower bill than the flat 15% Property Tax. The IRD's online tax computation tool allows owners to model both outcomes before electing on the annual BIR60 return. Eligibility requires residency in Hong Kong; non-resident landlords cannot elect Personal Assessment and pay the flat 15% rate.

A note on non-residential properties: offices, shops, and industrial premises are subject to the same Property Tax, Rates (at 5% flat), and Government Rent as residential property. The 2024 stamp-duty abolition aligned residential and non-residential AVD treatment so both now pay Scale 2 rates without distinction.

For guidance specific to your circumstances, consult a qualified tax professional registered with the Hong Kong Institute of Certified Public Accountants (HKICPA) or a solicitor qualified in Hong Kong property law. The rules summarised here reflect the position as at June 2026; rates and thresholds are subject to annual revision in the Budget.