Hong Kong Property Tax Rates and Filing Requirements for Landlords

Hong Kong Property Tax: Rates, Filing and Deductions

Hong Kong property tax is charged on the rental income from land and buildings located in Hong Kong. The Inland Revenue Department (IRD) administers this tax under the Inland Revenue Ordinance (Cap. 112).

Hong Kong Property Tax Rates 2025

For the year of assessment 2025/26, the property tax rate is a flat 15% of the net assessable value. This rate is not graduated. It applies uniformly to all rental income from Hong Kong property, regardless of the taxpayer's total income.

The net assessable value is calculated as:

Net Assessable Value = (Rent received or receivable - Government rates paid by the landlord) × 80%

A standard 20% statutory allowance is deducted from the balance of rent after deducting rates. This allowance covers deemed repairs, maintenance and outgoings. No actual expenses need be incurred; the 20% is given automatically. If actual allowable expenses exceed 20%, the owner may instead claim those actual expenses by filing the appropriate election. Mortgage interest is the most common reason to do so, but the election is uncommon in practice.

Hong Kong Rental Income Tax: Who Must File

The filing obligation depends on the legal form of the owner.

Individual owners file their rental income on Form BIR57 - Property Tax - issued by the IRD as part of the annual tax return cycle. The return is generally due within one month of the date of issue. An individual whose only Hong Kong property income is from a single property and who is not in a trade of property investment will receive a BIR57. If the individual also has employment or business income, the rental income may be reported on their Form BIR60 (Salaries Tax return) or Form BIR52 (Profits Tax return for unincorporated businesses) if they elect to have the property taxed under profits tax.

Corporate owners file rental income on Form BIR58 - Property Tax Return. This return is issued to companies that own Hong Kong property but are not carrying on a property trading or development business. Where a company's principal business is property investment or trading, the rental income is instead reported on Form BIR51 (Profits Tax return for corporations) and taxed as profits, not property tax.

How to File Hong Kong Property Tax

The IRD issues the relevant property tax return based on its records. The process is:

1. Receive the return - The taxpayer will receive a pre-printed Form BIR57 (individual) or Form BIR58 (corporate) from the IRD.
2. Complete the return - Enter the property address, the basis period (the year of assessment - generally 1 April to 31 March), the gross rent received, any government rates paid by the landlord, and any other deductions such as mortgage interest if electing out of the 20% statutory allowance. The form calculates the net assessable value and the property tax payable.
3. File by the due date - Returns are generally due within one month of issue. Late filing carries penalties. The IRD may grant an extension on application, but there is no standard block extension for property tax returns as there is for profits tax.
4. If no rental income - If the property is occupied by the owner or is vacant, the IRD will not normally issue a property tax return. Notify the IRD in writing if you believe you have been incorrectly assessed.

Interaction with Profits Tax and the Election

If the property is held as part of a trade, the rental income is chargeable to profits tax instead of property tax. The owner files a profits tax return (Form BIR51 for companies, Form BIR52 for unincorporated businesses) and property tax is not separately charged.

An individual owner of a property that is not part of a trade may still elect to have the rental income taxed under profits tax on Form BIR60. This is beneficial if the individual has other assessable profits that absorb the two-tiered rates concession (7.5% on the first HK$2,000,000 of assessable profits for 2025/26) or if the property is subject to significant mortgage interest. Make the election on the property tax return itself: mark the appropriate box and file the return as a profits tax return.

A company that owns property but is not in the property trade must also file property tax on Form BIR58. However, if the company's total rental income is included in its profits tax return (Form BIR51) and it pays profits tax on that income, the IRD may accept that filing in lieu of a separate property tax return. In practice, the IRD will issue both returns if it identifies a property-holding company that does not trade. Complete only the profits tax return and cancel the property tax return by notifying the IRD.

Provisional Property Tax and Holdover

Property tax is charged on a provisional basis for the year of assessment. For the current year (e.g. 2025/26), the IRD will issue a provisional assessment based on the previous year's income. The taxpayer must pay the provisional tax in two equal instalments, generally in November and April.

A taxpayer may apply for a holdover of provisional tax if they expect their rental income to be lower than the previous year. The grounds for holdover are set out in section 63J of the Inland Revenue Ordinance (Cap. 112). The application must be made in writing to the IRD, stating the estimated reduction and the reason. Common reasons include vacancy, rent reduction, or a change in the property's use. The IRD will grant a holdover of all or part of the provisional tax if it is satisfied that the amount would otherwise be excessive. There is no standard form; a letter addressed to the Commissioner of Inland Revenue is sufficient.

Deductions Allowed

The deductions available are limited:

• Government rates - The amount paid by the landlord as rates to the government is deductible from gross rent before the 20% statutory allowance.
• Interest on loans - Mortgage interest paid to a financial institution to acquire the property is deductible if the owner elects out of the 20% statutory allowance and instead claims actual expenses. The owner must have owned the property throughout the year. The deduction is capped at the net assessable value after rates but before the statutory allowance. The loan must be specifically for the property's acquisition; a general loan used to acquire the property does not qualify.
• Other expenses - Actual outgoings such as repairs, management fees and property agent fees are also deductible only if the owner elects out of the 20% statutory allowance. In practice, most owners take the standard 20% allowance. It eliminates the need to document expenses and often yields a higher deduction.

Territorial Source and DIPN 21

Property tax applies only to income derived from land and buildings situated in Hong Kong. The territorial source principle means that rental income from a property outside Hong Kong is not subject to Hong Kong property tax, regardless of the owner's residence. The IRD's Departmental Interpretation and Practice Note 21 (DIPN 21) provides detailed guidance on the locality of profits, including rental income. For a property located in Hong Kong, the source is clear: the income arises where the property is situated.

Stamp Duty on Property Transfers

The acquisition and disposal of property attract stamp duty, though this is separate from the ongoing property tax. On a transfer of real estate, the buyer pays ad valorem stamp duty at rates depending on the property's value and the buyer's status. The seller pays a fixed stamp duty of HK$100 on the instrument of transfer. The IRD's stamp duty office stamps the document. Stamp duty is not deductible against rental income.

Two-Tiered Rates and Connected Entities

The two-tiered rates for profits tax (8.25% on the first HK$2,000,000 of assessable profits for corporations, 7.5% for unincorporated businesses) do not apply to property tax because property tax is a flat 15%. If the owner elects to have the rental income taxed under profits tax, the two-tiered rates may apply to the rental income alongside other business profits. Only one entity in a group of connected entities may elect the two-tiered concession. A connected entity includes companies that share common direct or indirect control, or where one entity controls another. The IRD's guidance on connected entities is found in the Inland Revenue Ordinance and the Department's practice notes.

Owner-Occupier Properties

If the property is occupied by the owner and not rented, no property tax is payable. The owner does not need to file a property tax return. Keep records in case the IRD enquires. If the property is partly occupied by the owner and partly rented, property tax is charged only on the portion of the income derived from the rental.

Summary of Forms

The IRD will issue the appropriate return based on its records. If the owner is unsure which form to file, contact the IRD's Property Tax Unit or a professional adviser.