The Hong Kong Inland Revenue Department has released a notice detailing the property tax obligations for properties entirely, jointly, or co-owned by individuals; and properties owned by corporations or other entities.
Property tax is charged on owners of land and/ or buildings (“Landed Property”) by reference to the actual consideration receivable in respect of the right of use of the Landed Property (including rent, license fee, and lease premium) in the relevant year of assessment.
Property owners who are in receipt of rental income and liable to tax but have not yet received a relevant tax return (see below) must inform the Commissioner of Inland Revenue (“the Commissioner”) in writing of the particulars of the leased property not later than four months after the end of the basis period in the year of assessment in which they are so chargeable (if the owner is liable to property tax for the year of assessment 2023/24, he/ she should notify the Commissioner on or before 31 July, 2024).
When a property owner receives a tax return, even if there is no rental income to report (e.g., the property is owner-occupied), he/ she is still required to furnish a duly completed tax return within the stipulated time to the Department.
Property owners should report the rental income from different types of property ownership in the relevant tax return as follows:
- Solely owned by an individual – Tax Return – Individuals (BIR60).
- Jointly owned or co-owned by individuals – Property Tax Return (BIR57).
- Owned by corporations and bodies of persons – Property Tax Return (BIR58).
Besides, property owners chargeable to property tax must:
- Keep sufficient rent records (such as lease agreements and duplicates of rental receipts) for at least 7 years.
- In writing, inform the Commissioner of the particulars of the change in the postal address or the property ownership within one month after the effective date of the change.
Where a corporation has been exempted from property tax and there is a change in the ownership or use of the property, or in any other circumstances which may affect such exemption, the corporation must notify the Commissioner in writing of the change within 30 days after the event.
Failure to comply with the requirements of the Inland Revenue Ordinance may result in heavy penalties.
