Mr. Shangkong | How to beat the new property tax?

The higher-ups set out policy and the rest of the population then proceed to circumvent the new policy. That’s exactly what’s happening in Hong Kong right now.

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Published: 1:19pm, 31 Oct 2012Updated: 6:35pm, 31 Oct 2012

Remember the saying? “Man proposes - God disposes.” China has a variation on that. Basically it says that higher-ups set out policy and the rest of the population then proceed to circumvent the new policy. That’s exactly what’s happening in Hong Kong right now.

With the introduction of the additional 15 per cent stamp duty for non-Hong Kong permanent residents (PRs) and corporate buyers – described as a rare “anti-foreigner tax” in Hong Kong by some international media – many non-local home buyers are working with property agents and lawyers to find out how to legally avoid the new tax.

In the past 48 hours, the property market has generated counter-measures, including the following options, which property professionals say may or may not work – and should not be treated as a ‘one-size-fits-all’ solution.

Option one: Don’t buy the property – acquire the company instead

Some agents have noted property developers and potential buyers are chewing over this option, and local media reported that at least one transaction has successfully gone through.

For example, if you want to buy two or three luxury properties, which may be worth more than HK$100 million in total, and you don’t want to pay HK$15 million for the new buyer’s stamp duty, you may want to see if you can work with the developer to purchase a company that owns the properties you want to buy rather than to buy the properties directly.