Thursday 23 November 2017

More Hong Kong buyers use company share transfers to avoid stamp duties.

A growing number of buyers of luxury residential and commercial properties are making their purchases through companies to escape paying stamp duties.

More Hong Kong buyers use company share transfers to avoid stamp duties.

Hong Kong developers are now offering discounts on some developments in an attempt to lure back buyers.

December 12, 2013

This is because if you acquire the company that owns a property in Hong Kong, rather than buy as an individual, you only pay 0.2 per cent duty which is why local real estate agents are reporting a growing number of transactions using this method.

Hong Kong’s South China Morning Post quoted one local real estate agent who estimates that up to 50% of transactions in some residential buildings now use company transfers, up from about 10% before the government doubled stamp duties in February this year.

The doubling of stamp duties was imposed by the Hong Kong government in an attempt to cool an overheating property market and means buyers pay between 1.5 per cent - the rate for properties valued at less than HK$2 million - and 8.5 per cent, the rate for properties valued at more than HK$21.7 million.

The doubling of stamp duties followed the introduction in October last year of an additional stamp duty of 15 per cent levied on buyers who are not permanent residents or who buy property through a company.

However, local accountants warn that while buying a property through a company will incur lower stamp duty, buyers using this method would have to accept the investment risk of buying a whole company as the potential risks of such a transaction could include the liabilities of the company that a property buyer takes over.

 

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