Hong Kong Property Tax Guide (6) - Illustration of Computation of Property Tax and Application for holdover of Provisional Property Tax

1. Illustration of Computation of Property Tax

Rental income for 1 July 2007 to 31 March 2008: $38,000 per month. Rates paid by owner for the 3 quarters ending on 31 March 2008: $12,000. Provisional Tax paid per last tax bill for 2007/2008: $35,000.

Rent for 9 months ($38,000 x 9): $342,000 less rates paid by owner of $12,000 equal to $330,000 (assessable value). Then, less 20% allowance for repairs and outgoings of $66,000, gives $264,000 (Net assessable value).

Property Tax for 2007/2008: $264,000 *16% = $42,240

Less: Provisional Tax paid for 20007/2008: $35,000

Balance payable for 2007/2008: $7,240

Add: Provisional Tax for 2008/2009: $264,000 * 12 / 9 * 16% = $56,320.

Total tax payable to be shown in the tax bill: $7,240 plus $56,320 equal to $63,560.

The tax $63,560 is payable in two installments: the first one in November 2008 and second in April 2009. The November tax payable is 7,240 plus 7 / 12 of 56,320 totaled $40,093. The April tax payable is 5 / 12 of $56,320 equal to $23,467.

2. Application for hold Over of Provisional Property Tax

In the above sample, the taxpayer can apply for hold over of Provisional Property Tax any of the following condition is met:

1. The provisional rental income for 2008/2009 is likely less than 90% of the amount assessed.

2. He ceased to be the owner in 2008/2009;

3. He applied for Personal Assessment that could reduce his total tax payable; or

4. He has objected to the 2007/2008 assessment of Property Tax.

The application for holding over of Provisional Tax must be in writing, setting out the grounds for the hold-over and proposing a suggested provisional income if applicable. It should be sent to the Revenue not later than 28 days before the due date of the provisional tax.