Posted by
Withalliam
12 yrs ago
Has anyone know if non-HK citizen can avoid the special stamp duty tax by setting up a company to purchase the company?
Has anyone done that and have any tips to share?
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I believe the answer is No - since the company would have to pay the tax.
The remaining "loophole" is that those with HK ID's can buy one property for own use, and not pay an "increased" tax.
I expect that children will be buying with "help" from their parents, rather than the parents buying in their own names a second or third property.
I am not a lawyer, but I think this may be a nice, simple, legal way to avoid paying the doubled tax.
Anyway, the government's repeated tax increases seems to have done its job, and sentiment has changed, and potential buyers are now standing aside and letting the market slide somewhat.
Let's see how far they let it drift lower, before HK buyers start stepping back in.
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If the property is already owned by a company before the SSD etc went into effect does buying the company (instead of the property) trigger SSD? I'm not sure.
I'm sure there are people looking at putting properties in the names of children and other relatives and I can just see some of the future disputes arising some years into the future. Personally, I don't think it's worth doing until the market has reached a level where it represents good value.
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TI,
If you buy a company owning a flat, do you really know what the total liabilities are?
My own view is that secondhand properties (under $10 million) in promising areas, might drop by 5-10% before we see another rally, which could take prices back up to the old highs and maybe higher.
I expect prices for New flats, and in oversupplied areas to drop more than that.
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Thanks. I will explore the possibilities then.. the company will need to pay for tax for sure just as permanent HK ID holders. the tax the company need to pay will still be less than the special stamp tax that non permanent HKID holders need to pay.
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"the tax the company need to pay will still be less than the special stamp tax that non permanent HKID holders need to pay"
Based upon what?
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'Special Stamp Duty' relates to properties that are for sale within a penalty incurring period. Buying a property under a company at this time, and selling the company and its assets within the (now three year) period will avoid this penalty stamp duty. Sadly a 'Buyer's Stamp Duty' of 15% now applies to companies and non-permanent residents buying residential property making it a pretty much dead idea.
Just to muddy the waters, there is now also an 'Ad Valorem' stamp duty for individuals and companies who purchase property (commercial, industrial and residential), and already own property.
http://www.ird.gov.hk/eng/tax/sdu.htm
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@ OffThePeak - no, you do not know what liabilities are in the company. Also, companies cost money to run - annual audit fees, BRC etc. Even with the additional deductions, it is not worth it for one small/mid-sized flat.
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@Offthepeak- I assume so because the new policy taken effect couple months ago requires me paying 18% extra of tax on top of what locals need to pay for the property around 6 mill HKD. (information was given by the property agent) Therefore I assume a company will pay a bit more of what a local need to pay on tax, but will never be 18% more.
@Brocko, thanks for the clarification.. "Sadly a 'Buyer's Stamp Duty' of 15% now applies to companies and non-permanent residents buying residential property making it a pretty much dead idea. " very sad..
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