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Is stamp duty exempted if I transfer a property to a family member?

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  1. #11

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    Quote Originally Posted by bdw:
    Are you talking about stamp duty or SSD (special stamp duty)?
    I’m not too sure myself, but just wondering if any stamp duty or taxes is required for transferring a property to a family member.

  2. #12

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    Quote Originally Posted by Drunken Master:
    If purchased more than 36 months ago then no SSD. But do you need to pay AVD when transferring to spouse?
    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.

  3. #13

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    Quote Originally Posted by traineeinvestor:
    Based on this paragraph in the IRD's Stamp Office Interpretation and Practice Notes No. 8 (Revised) the answer would appear to be that normal ad valorem duty is payable on transfers between close relatives. However, best to check with a conveyancing solicitor:

    51. Where a residential property is sold or transferred by a person to his
    or her close relative who is acting on his or her own behalf, irrespective of
    whether or not they are HKPRs or beneficial owners of any other residential
    property in Hong Kong on the date of sale or transfer, the relevant chargeable instrument is chargeable with AVD at scale 2 rates."

    (Scale 2 rates are the normal rates of stamp duty.)

    https://www.ird.gov.hk/eng/pdf/e_soipn08.pdf


    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.

  4. #14

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    Talk to a lawyer before you give up.


  5. #15

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    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.

    traineeinvestor likes this.

  6. #16

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    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.

    traineeinvestor, bdw and shri like this.

  7. #17

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    Quote Originally Posted by wilfhk:

    2. Buyer's Stamp Duty (BSD) - a tax only applicable if you are not a HK resident
    Just to be clear, it's only applicable if you are not a HK permanent resident. Even if you are a HK resident but not PR, you will still need to pay the BSD.

  8. #18

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    thanks for helping me to clarify


  9. #19

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    Original Post Deleted
    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 tradeoff
    shri likes this.