Updates of 2024/25 Budget on Hong Kong Stamp Duty Scheme

In this article, our Founder and Managing Director Victoria Allan explains stamp duty rates for Hong Kong buyers and investors on residential properties, including how stamp duty is calculated and how much you can expect to pay for stamp duty in Hong Kong.

Stamp Duty & Mortgage Changes @ 28 February, 2024

The HK Government has just announced removing all restrictions on property transactions stamp duty with immediate effect. 

1. Buyer's Stamp Duty (BSD) targets non-permanent residents and New Residential Stamp Duty (NRSD) for second-time purchasers are removed. 

2. Homeowners no longer need to pay a Special Stamp Duty (SSD) if they sell their homes within two years. 

The Hong Kong Monetary Authority (HKMA) has adjusted the countercyclical macroprudential measures for property mortgage loans.

1. For residential properties, the maximum loan-to-value ratio for homes valued at HK$30M or below will be raised to 70%, and for properties valued at HK$35M or above will be changed to 60%. 
   Ratios for properties valued between HK$30 million and HK$35 million will be adjusted downward gradually to avoid a sudden drop in applicable LTV ratios.

2. For non-self-use residential properties, the maximum ratio will be raised to 60%.  

What are stamp duties?

In the simplest terms, stamp duties in Hong Kong are sales taxes paid to the government by anyone taking part in a property transaction. They can have a significant impact on the final cost of the property for a host of reasons:

• Are the parties Hong Kong permanent residents?
• Is the purchaser a first-time buyer?
• How long has the vendor held the property?
• Is the property a commercial asset?

These are just a few of the host of factors influencing stamp duty rates in Hong Kong.

The Hong Kong Government began implementing a series of increased stamp duties on real estate in 2010, when the property market was heading towards overheating due to rampant speculation. These so-called ‘cooling measures’ were designed to control prices that were being driven up by investors and non-residents. Prices in this high-demand market skyrocketed approximately 400% between 2000 and 2010, forcing many local residents out of the market altogether.

Stamp duties weren’t the only tool: the Hong Kong Monetary Authority set down a new policy for bank lending and loan-to-value ratios as well as strengthening stress tests for buyers. Cooling measures haven’t been repealed, but they have been adjusted regularly since they were put in place, including provisions to allow partial refunds of stamp duty paid for permanent residents of Hong Kong who are upgrading.

What are Hong Kong’s stamp duties?

Currently, there are 3 main stamp duties applied to immovable property in Hong Kong residential sales transactions:

1. Ad Valorem Stamp Duty (AVD)
2. Buyer’s Stamp Duty (BSD) - removed from 28 February, 2024
3. Special Stamp Duty (SSD) - removed from 28 February, 2024
4. New Residential Stamp Duty (NRSD) - removed from 28 February, 2024

AVD – Ad Valorem Stamp Duty

The Ad Valorem Stamp Duty for residential property (AVD) is payable at a scaled rate ranging from HK$100 for properties under HK$4 million up to 4.25% of the sale price for property over $21,739,120. The AVD is payable by:

• Buyers
• Permanent residents
• Non-permanent residents
• Purchases registered to companies

BSD – Buyer’s Stamp Duty

The Buyer’s Stamp Duty (BSD) is removed. 

SSD – Special Stamp Duty

The Special Stamp Duty (SSD) is removed. 

NRSD – New Residential Stamp Duty

The New Residential Stamp Duty (NRSD) is removed. 

How are stamp duties in Hong Kong calculated, and when are they paid?

Hong Kong’s stamp duty scheme at a glance, the rates are transparent and easily calculated once vendors and purchasers know where they slot in.

When are Hong Kong stamp duties payable?

Once a property is purchased, the stamp duty is payable within 30 days from the signing of the Provisional Agreement for Sale and Purchase (PASP) unless superseded by a Formal Agreement that is signed within 14 days, in which case stamp duty is payable within 30 days from when the Formal Agreement is signed.