Hi, mamafan,
No matter if you have stamped the tenancy agreement or not, you have the duty to report the property income to the HK Inland Revenue Department. If the tenancy agreement has been stamped, it will become legally enforceable. Anyway, the calculation for property tax is as below:
Annual rental income - rates paid by landlord - 20% statutory allowance = net assessable value
Property tax = net assessable value x standard tax rate (16%)
You may also apply for Personal Assessment. The net assessable value as mentioned above will be grouped together with your salary income and other business profit generated from sole proprietor business. Under Personal Assessment, the mortgage loan interested could be deducted to the extent of the net assessable value. The total income will be deducted by personal allowances and other allowable deductions and the balance will be subject to tax calculated at progressive rates.
I am not sure whether the above information is too complicated for you. I hope it will be useful for you.
Lun Ba Ba
I think that there are 2 issues : one is for stamping to protect the landlord in case the tenant fails to pay rent;
the other issue is to report to IR. In case the rent is not under any housing allowanace offerd to the tenant, then if you report to IR, IR will charge you based on Property Tax (16%), of course, you would then pay more tax.
I wonder whether I stamp the tenancy agreement, but not to report to IR. Workable? High Risky??? Yours advice, thank you.
If you choose to stamp the tenancy agreement, it is possible for the IRD to trace your rental income. It is not advisable for you to omit the rental income in your tax return. According to my understanding, the IRD is more aggressive in penalty action nowadays. So, don't run the risk.
Lun Ba Ba
Besides stamping the tenancy agreement, the agent also asked me to fill in the CR109 form to inform the IRD the rental details within one month from signing the tenancy agreement. I know some agents do not remind 業主 to fill in the CR109 form but if you sign the agreement through 律師樓, they must ask you to fill in this form. In case the court ask you to provide the CR109 form, you can still get it then but cost $500. So in order to fully protect yourself (業主),
don't forget to fill in this form!
My friend told me that there is a separate tax return form to fill in for property tax. Is that true?
If the property is solely-owned and let during the year, the tax payer has to report the details in the Individual Tax Return B.I.R. 60.
If the property is jointly-owned and let during the year, the tax payer has to report the details in the Property Tax Return.
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