Tax Benefits for Real Estate Investors in Hong Kong

Published on October 31, 2025 and written by Cyril Jarnias

In the dynamic landscape of real estate investment, Hong Kong stands out as an attractive destination, not only for its strategic position but also due to its favorable tax incentives. This region has established an environment conducive to investors by offering tax reductions and exemptions that significantly lighten the financial burden of real estate transactions. Whether you’re a seasoned investor or new to the market, understanding these tax mechanisms can not only optimize your investment returns but also strategically influence your purchasing decisions.

Local Taxation: A Favorable Framework for Investors in Hong Kong

Local taxation in Hong Kong is distinguished by particularly low tax rates and a simple structure, making it a very attractive environment for real estate investors.

Low Tax Rates and Impact on Real Estate Investment

• Corporate tax is set at 16.5% for companies, with a reduced rate of 8.25% on the first HKD 2 million of profits through the two-tier regime.
• For individuals, the income tax rate ranges from 2% to 17%, capped at 15% on taxable income after deductions and allowances.
• Direct property tax applies at a rate of 15% on net rental income, after deducting a standard 20% allowance for expenses and charges.

Tax Exemptions and Reductions for Real Estate

• Possible exemption on rental income when the property is owner-occupied.
• Deduction of mortgage interest for the main residence up to HKD 100,000/year for 20 years.
• One-time 100% reduction in profits tax, salaries tax, and personal assessment tax for 2024/25, capped at HKD 1,500.
• Numerous personal deductions and allowances, including for dependents and donations.

Role and Comparison of Real Estate Transaction Taxes

Tax in Hong Kong	Rate/Structure	International Comparison
Stamp Duty	1.5% to 4.25% depending on value and buyer status	Lower than Singapore (up to 20% for foreigners), London (up to 15% for second homes)
Buyer’s Stamp Duty	15% for non-residents	Comparable to Singapore, higher than New York
Special Stamp Duty	10% to 20% if resold < 3 years	Higher than Singapore (4% to 16% depending on duration)

International: Double Taxation Avoidance Agreements to Optimize Gains

The double taxation avoidance agreements signed by Hong Kong with other countries allow real estate investors to reduce or even eliminate double taxation on international real estate income. These treaties provide tax security and optimize the overall tax burden of cross-border investments.

Main Mechanisms of the Agreements:

• Taxation at the property’s location: Income from real estate is generally taxed in the country where the property is located.
• Tax credit or exemption: The resident of the second country may benefit either from a tax credit equivalent to the tax already paid abroad (up to their local tax limit), or from a total or partial exemption on the same income.
• Avoidance of double exemptions: Specific clauses prevent certain income from not being taxed at all, ensuring fair distribution between states.

Concrete Example — France-Hong Kong Agreement

Mechanism	France	Hong Kong
Real Estate Income	Taxed in France if property located in France	Tax credit for taxes paid in France
Wealth	Taxed in France based on property location	No wealth tax in Hong Kong

For a Hong Kong investor owning a building in France:

• Capital gains or rents will be primarily taxable in France.
• If these amounts are also taxable under Hong Kong law, the investor will then benefit, thanks to the agreement, from a tax credit equal to the amount actually paid in France, reducing their tax due in Hong Kong.

Example — Canada-Hong Kong Agreement

The agreement also states that residents benefit either from:

• An exemption (if the income is already properly taxed in the source country)
• Or a tax credit to avoid any double taxation.

Criteria to Benefit from the Agreements:

• Be considered a tax resident of at least one of the two signatory states
• Provide proof that the income actually comes from the partner country (e.g., rental proof or notarized deed)

Typical Administrative Procedure:

1. Declare property income to the relevant tax authorities
2. Provide all documents proving effective payment in the source country (foreign tax notice…)
3. Fill out specific forms required by each national administration to claim credits or exemptions

Impacts on the Overall Effective Rate:

Thanks to tax treaties,

• The overall effective rate borne by an international real estate investor is often limited to the rate applied in the country where the property is physically located.

This therefore allows:

• Avoiding any unfair overlap between two national tax legislations
• Legally planning international wealth strategy

Key takeaway:
The treaties enable Hong Kong and international investors to achieve transparent and secure tax optimization when they directly or indirectly hold real estate assets located outside their usual territory.

However, systematic use of these tools requires rigorous legal monitoring and sometimes professional assistance to correctly complete all required formalities.

Real Estate Taxation in Hong Kong: Understanding the Nuances

Types of Real Estate Taxes in Hong Kong

Type of Tax	Rate/Main Terms	Applicability
Stamp Duty	15% for residential properties, 0–4.25% for non-residential, HK$100 for transactions ≤ HK$4M (after recent reform)	Property purchase/sale
Property Tax	15% on net assessable value (NAV) of rental income	Rental income
Capital Gains Tax	No tax on real estate capital gains	Not applicable

Detailed Explanations

Stamp Duty

• When purchasing a property, stamp duty is required.
• The standard rate for residential transactions is 15% of the purchase price.
• For non-residential properties, the rate ranges from HK$100 to 4.25% depending on the transaction value.
• Since 2025, properties of HK$4 million or less benefit from a reduced rate of HK$100 to encourage home ownership.
• Reduction measures exist for first-time buyers and to limit speculation (BSD, SSD, etc.).

Property Tax

• Applies to income from renting a property.
• The rate is 15% on the net assessable value (NAV), calculated as follows:
  • Gross annual rent
  • Minus a standard 20% deduction for expenses and repairs
  • = Taxable NAV
• Concrete example: For an annual rent of HK$120,000, the NAV after deduction is HK$96,000, and the property tax due will be HK$14,400.

Capital Gains Tax

• There is no capital gains tax in Hong Kong when reselling a property.
• This promotes market liquidity and attractiveness, especially for foreign investors.

Impact on Local and Foreign Investors

Local Buyers

• Can benefit from a reduced stamp duty rate for purchasing their first main residence.
• Rental income remains subject to property tax.
• Absence of capital gains tax or wealth tax.

Foreign Investors

• Subject to standard stamp duty and an additional surcharge (Buyer’s Stamp Duty, BSD) of 15% when acquiring a residential property.
• No difference in treatment for property tax on rental income.
• Absence of capital gains tax, making investment attractive despite high stamp duties.

Profile	Stamp Duty	Property Tax	Capital Gains Tax	Other Surcharges
HK First-Time Buyer	Reduced/HK$100	Yes	No	No
Local Investor	Full	Yes	No	Sometimes SSD
Foreign Investor	Full + BSD	Yes	No	BSD (15%)

Tax Benefits for First-Time Buyers vs Multiple Investors

• First-time buyers benefit from reduced stamp duties or partial exemptions, significantly lowering the acquisition cost of their first residence.
• Multiple investors (already owning a property) must pay the full stamp duty rate, as well as surcharges for quick resale (Special Stamp Duty, SSD) or purchase as a foreigner.
• The absence of capital gains tax mainly benefits investors, but entry barriers are higher for them.

Recent Reforms and Changes

• In 2025, the government raised the stamp duty exemption/reduction threshold to HK$4 million to support first-time buyers.
• A cap on property tax concessions at HK$500 per property for the first fiscal quarter 2025/26 was introduced, applicable to both residential and commercial premises.
• No major rate changes for 2025–2026, but occasional adjustments to stimulate certain market segments.

Common Tax Planning Practices

• Structuring via companies to hold real estate assets to optimize succession or transfer.
• Accurate declaration of rental income to benefit from the standard 20% deduction.
• Timing of purchases/sales to avoid paying SSD (applicable for quick resale).
• Use of double taxation avoidance agreements for international investors to avoid multiple taxation on property income.

Key Points to Remember

• Absence of capital gains tax and inheritance taxes.
• High stamp duty to curb speculation, with targeted exemptions for first-time buyers.
• Simple but rigorous taxation on rental income.
• Occasional tax relief measures to stimulate the market based on the economic situation.

Concrete example:
Purchase of an apartment at HK$3.8 million by a local first-time buyer:

• Stamp duty: HK$100 (after 2025 reform)
• Property tax: 15% on net rental income if the apartment is rented
• Capital gains tax: none upon resale

Global Comparison: Why Hong Kong Stands Out

Hong Kong distinguishes itself on the global stage with an exceptionally favorable tax framework for international real estate investors, notably due to low or non-existent tax rates on property income, the absence of real estate capital gains tax, and no inheritance taxes.

City	Tax on Rental Income	Real Estate Capital Gains Tax	Inheritance Taxes	Overall Real Estate Taxation
Hong Kong	15% on net income*	None	None	Very low, no capital gains or inheritance taxes
London	20-45% (income tax based on resident/non-resident status)	18-28% on real estate capital gains	40% above a threshold	High, complex regime for non-residents
New York	Up to 37% (federal), + state and local taxes	15-20% (federal), + local taxes	Up to 40% (federal)	Very high, multiple levels of taxation
Singapore	0-22% (progressive on income), 15% for non-residents	No capital gains tax**	None	Moderate, but significant stamp duties

* The 15% rate in Hong Kong applies to the net value of rents received, after deductions for charges and repairs.
** Singapore applies high stamp duties on acquisitions but does not tax gains on resale, except in cases of proven commercial activity.

List of Hong Kong’s Tax Features Favoring International Real Estate Investment:

• Absence of real estate capital gains tax: Profits from property resale are not taxed, unless the activity is considered commercial.
• No inheritance tax on real estate: Transferred properties are not subject to inheritance tax, favoring international wealth planning.
• Low and simplified tax on rental income: 15% on net value, after deducting eligible charges (unpaid rents, repairs, taxes paid by the owner).
• Progressive personal income tax scale capped at only 17%.
• Competitive stamp duties often capped during acquisitions, with regular exemptions to encourage certain types of investments.

Comparison with Other Financial Centers:

In London and New York, taxation is much heavier on rental income, capital gains, and wealth transfers, reducing attractiveness for foreign investors.
Singapore also offers an advantageous tax framework (no capital gains tax, no inheritance taxes), but compensates with high stamp duties on purchase, which can hinder quick turnover of real estate capital.

Impact on International Investment:

These tax policies strongly encourage foreign investors to prefer Hong Kong for diversifying or securing their real estate portfolios:

• Stimulation of foreign investment flows: Hong Kong regularly ranks among the top five global markets in terms of cross-border real estate investment.
• In 2024, foreign investments in Hong Kong commercial real estate exceeded USD 10 billion, more than double the volume observed in Singapore during the same period.
• Institutional and individual investors represent a major share of demand, particularly for prestige offices and high-end residences.

Concrete Example:

In 2023, nearly 70% of real estate transactions over USD 50 million in Hong Kong involved foreign capital, compared to 48% in London and 37% in New York for equivalent amounts.

Summary of Hong Kong’s Competitive Advantages:

• Reduced direct real estate taxation
• Absence of penalizing taxes on resale or transfer
• Administrative simplicity and legal security
• High liquidity and sustained foreign investment volume

An attractive tax framework and high investment flows place Hong Kong as a prime location for international real estate investors, often surpassing its global competitors in this segment.