So AVD is a different kind of tax that’s required?
According to traineeinvestor’s post, it seems AVD is required for any transfer between family members. It’s kinda stupid that even though SSD is exempted, but at the same time you have to pay AVD which is also similar at a rate of 2-3%.
Last edited by greentealatte; 04-01-2020 at 01:44 PM.
This basically confirms that any transfer of property to a family member requires paying AVD, which is around a 3% rate.
Well that’s a bummer. Initially I thought stamp duty tax is exempted...but then there’s this AVD thing which requires you to pay a 3% tax regardless.
I was thinking of transferring my property to a family member so I can buy a new flat. But now I might just have to buy a new flat under my family member’s name instead. I don’t think the 3% tax is worth paying for just to switch names for a property. For example if my property is worth $10mil, I’d have to pay a tax of 300,000 HKD which is still a lot :/
Thanks for the info though!
Last edited by greentealatte; 04-01-2020 at 01:45 PM.
There are three separate kinds of stamp duty:
1. Special Stamp Duty (SSD) - which is payable if you have bought the property for less than 36 months at the time of the resell. However, if you transfer the property to your family members, SSD is not payable regardless of how long you have bought. The IRD website you have referred to only covers SSD.
2. Buyer's Stamp Duty (BSD) - a tax only applicable if you are not a HK resident
3. Ad-valorem Stamp Duty (AVD) - a stamp duty payable whenever there is a transfer in title of a property.
Unfortunately, AVD is payable even when a property is transferred between close family members.
as a lawyer, I have seen people trying to avoid paying AVD using either one of the following methods to transfer properties to their family members:
1. put the names of their family members in their will. Passing property after death is tax free, however, it may only take place after the death of the property owner.
2. try to break the transfer in several goes, e.g. transfer half this year, transfer the other half again a few years later. It helps reducing AVD since a lower tax rate applies for smaller transfers (e.g. only $200 tax is applicable for two transfers if each transfer worths less than HK$2million). However, whether you may successfully avoid AVD depends on whether the IRD adjudicate the transfers as belonging to the same series of transaction, if so, IRD would regard the two 2-million transfers as a single HK$4 million transfer and charge a higher rate.
3. try to slightly underestimate the value of the property transferred.
thanks for helping me to clarify
We usually just let our client decide on the amount. The greater discount, more tax potentially saved, but there's a higher chance to raise suspicion on the side of IRD, so it's pretty much a tradeoffOriginal Post Deleted