As a property owner, you need to:

• keep sufficient records of rent received, such as lease agreements and duplicates of rental receipts, receipts for payment of rates（Note1）, correspondence relating to modification of lease terms and recovery of rent in arrears, for at least 7 years;

• complete and submit a tax return for reporting rental income;

• notify liability to tax unless you have already received the tax return from the Inland Revenue Department;

• notify cessation of ownership within 1 month of such cessation;

• notify change of address within 1 month of change;

• pay your tax.

    Note1：Rates are one of Hong Kong's indirect taxes levied on properties. The revenue collected forms part of Government's general revenue.
    Rates are charged at a percentage of the rateable value which is the estimated annual rental value of a property at a designated valuation reference date, assuming that the property was then vacant and to let.
    For the current Financial Year 2010-2011, the rates percentage charge is 5% and the designated valuation reference date is 1 October 2009.

Rental property held by individuals

1、Property Tax

Tax rate:15%

• Rental income includes the following: gross rent received or receivable; payment for the right of use of premises under licence; service charges or management fees paid to the owner; owner's expenditure borne by the tenant, eg repairs and property tax paid by the tenant; sums previously deducted as irrecoverable rent and now recovered; lump sum premium.

• Rent can not be recovered: only in the year determined to be unable to recover the rent reduction, not charging rent on time just in the nature of rent arrears, not "unable to recover the rent".

• A broad-brush deduction of 20% of the balance of the rental income after deducting the rates paid by the owner(s) and the irrecoverable rent will be automatically granted to you every year. The 20% is an all-inclusive element. You cannot claim deductions separately for government rent, decoration fees, rent-collection fees, building management fees, insurance and mortgage interests. If you are eligible to and have elected for personal assessment, you can claim the mortgage interest.

2、Stamp duty

Note 2: The yearly rent/average yearly rent/total rent has to be rounded-up to the nearest $100.

Personal property held for sale

Stamp duty

Holds rental property

1、Stamp duty

Note 2: The yearly rent/average yearly rent/total rent has to be rounded-up to the nearest $100.

2、Profits Tax

General tax rate: Corporations:16.5%, Unincorporated Businesses:15%

Tax concession: eligible debt instruments from the profits or interest income, and offshore business of professional reinsurance companies income, its tax rate is generally half of that rate.

Calculated: Profits Tax= Profit X 16.5%

Holds the property for sale

1、The company held the property for sale

1.1 Stamp duty

1.2 Profits Tax

Short-term holding of properties for sale, may be identified as transactions tax (taxation method, see 4.2); long-held (eg, more than two years) to sell their property can be classified as fixed / capital receipts derived from the nature of assets, is the nature of capital income, not taxable

2、Sale of the company as a whole (including property held)

2.1 Stamp duty

With effect from 1 September 2001, stamp duty on sale or purchase of any Hong Kong stock is charged at rate which vary with the amount or value of the consideration as follows:

2.2 Profits Tax

Short-term holding of properties for sale, may be identified as transactions tax (taxation method, see 4.2); long-held (eg, more than two years) to sell their property can be classified as fixed / capital receipts derived from the nature of assets, is the nature of capital income, not taxable.

In general, due to closure and transfer the business to continue operating while others receive income payments of a capital nature; sale of a business the right to gain / amount of goodwill is not taxable.