Property tax versus personal assessment.
Lower tax bill
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Property tax
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Personal assessment
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Your breakdown
Updates live as you type| Step | Property tax | Personal assessment |
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Two ways the IRD can tax your rent
A landlord in Hong Kong does not get a single rental-tax rate. Letting income can be taxed under property tax, which is simple but blunt, or you can elect personal assessment, which is more generous but only if your wider circumstances suit it. This calculator runs both and shows the lower bill, because the Inland Revenue Department lets you choose and there is real money in choosing well.
Property tax charges a flat 15 percent, the standard rate this calculator applies, on the net assessable value. The net assessable value is the rent you receive, less any rates you pay as owner, less a statutory 20 percent allowance for repairs and outgoings. That 20 percent is notional: you get it whether or not you actually spent it, but it is the only deduction property tax allows. Crucially, mortgage interest is not deductible under property tax at all.
When personal assessment wins
Personal assessment pools the rental income with your other income, then lets you deduct the mortgage interest on the let property and your personal allowances, before applying the progressive rates of 2 to 17 percent. If you carry a mortgage on the property or your total income is modest, those deductions and allowances can pull the bill well below the flat 15 percent. The trade-off is that personal assessment brings all your income into one computation, so a high earner with little mortgage interest may find property tax cheaper. The progressive bands, the basic allowance of $132,000 and the 20 percent statutory allowance are the figures the tool uses; confirm the current numbers with the IRD.
A let flat earning $480,000 a year, mortgaged
Take a flat let for $480,000 a year, with $14,400 of rates paid by the owner, $60,000 of mortgage interest, no other income, and the basic allowance of $132,000. The two computations diverge sharply.
Personal assessment costs $10,267 against $55,872 under property tax, a saving of more than $45,000, driven almost entirely by the interest and allowance deductions. The one-off Budget reduction this tool applies, up to $3,000, reaches the personal-assessment figure but does not touch the property-tax figure in this model.
The edge case, and who should run this
Flip the inputs and the answer flips. A landlord with no mortgage, low rates and substantial other income can find personal assessment produces little or no rental tax at all, sometimes a flat zero once allowances absorb the net assessable value, while property tax still charges its 15 percent. A zero personal-assessment result is not a glitch; it means your allowances and interest fully covered the chargeable income. In that situation property tax is the worse deal, and the calculator will still surface the lower number.
This tool is for any individual landlord deciding how to be assessed, especially one carrying a mortgage on a let property. It does not handle companies holding property, which are taxed under profits tax instead. Remember too that any gain when you eventually sell the flat is not taxed: Hong Kong has no capital gains tax, so this annual choice is the main tax lever you control.
Can I switch between property tax and personal assessment each year?
Personal assessment is elected on your tax return, and you can decide afresh each year of assessment based on which is better for that year. Because mortgage interest and your other income change over time, the cheaper route can flip from one year to the next, so it is worth recomputing rather than assuming last year's choice still holds.
Is mortgage interest on a let property ever deductible under property tax?
No. Property tax allows only the 20 percent statutory outgoings allowance and the deduction for rates paid by the owner. To deduct mortgage interest against rental income you must elect personal assessment, which is exactly why a heavily mortgaged landlord usually prefers it.