Ask Melanie | A bird in the hand may cost you a flock
Melanie Nutbeam, a certified financial planner based in Hong Kong, addresses common personal finance queries. Send your questions to [email protected]
If you are a permanent resident with no other residential property and you buy in your own name, your stamp duty rates are half the new rates and you are exempt from the 15 per cent buyer's stamp duty announced last October. On a HK$10 million property purchase you save HK$1.875 million in stamp duty.
If you are a permanent resident with residential property and you buy in your own name, you pay stamp duty at the new rates but not buyer's stamp duty. On a HK$10 million property you save HK$1.5 million.
In both cases you can claim allowances against rental income for property outgoings without detailed records. Things are simple, paperwork and costs are limited and you own the property.
If the property is bought through a company, things are more complicated and, initially at least, more expensive. Full stamp duty and buyer's stamp duty are payable. The company owns the property and you own shares in the company. You pay to establish the company and for annual accounting, audit and compliance costs.
These can be heavily offset by company tax breaks, flexibility in selling assets or shares, and the limiting of liability to company assets. The last is compelling if you want to protect other assets from creditors.