Property - Family transfer of ownership questions

[GeoHKQuestion]

Hi,

I have a situation in my wifes family where I would like some help and guidance in order to navigate a delicate property situation. To start with, I have browsed the forums as well as google about this so much, but I feel like getting some additional confirmation of my findings here and some clarity regarding the situation as it is quite difficult to understand everything.

Background and long story short: My wife and her family lives in the EU, she is born here but her parents are from HK. Her father, who is a HK citizen, owns half of a house in HK with the other half belonging to his brother (who has lived there with his family). His brother passed away and transferred his portion of the house to his wife last year, and she is not very friendly with the rest of the family and we are afraid that she might not be very cooperative. So my wifes father wants to transfer his portion of the house to my wife, as he is getting quite old as well. Also, the house was bought about 40 years ago, no mortgage to think about in this case.

So, what I want to know is, have we understood the process correctly, and if not, what are we missing. And more precisely how much everything will cost (which is quite important, because as we have understood it the transfer of ownership might be more expensive than we thought).

The way I understand it is there is a possibility to do a transfer of ownership, but there are some administrative fees connected to that (2350+2850 HKD?), where all you need to do is hire a solicitor, fill out a form, and the solicitor does the rest?

But, there is also stamp duty that might incur additional costs in the transfer to my wife/her family? I have tried finding out how much that might be but I am struggling with it. In this case, it should be ADV stamp duty I believe, which is based on a 15% flat rate of the market value of the property? If yes, how can we calculate this beforehand?

If it turns out to be way too expensive, my wifes father is considering writing a will to have her inherit his portion of the property. This should be exempt from any stamp duty in the case of transfer through inheritance? What we are worried about here is, in order to write the will, do we need the original contract of the property? Because my wifes uncles family has it, and that's where they are afraid that the uncles wife might not cooperate if we need the contract to write the will. Can my wifes father write the will properly for her to inherit, without having a copy of the contract as well? My wifes family has asked for a copy for the contract several times in the past but her uncle has avoided doing so.

I really am sorry for the wall of text. If someone has the time to provide some assistance in this situation, it would be greatly appreciated. It is a long shot but my wife and her family is quite stressed about this, and we are planning on going to HK this summer to try and resolve this situation and we are trying to be as prepared as possible.

Thank you.

[hk.main]

There's no tax on inherited property. I don't think you need the original contract to write up a will. In fact, if your wife is her father's only child a will may not even be necessary as all of his property and wealth will be equally divided up among his children upon his death (intestate) - assuming his wife already passed away.

If the property is given as a free gift, then the market value will be used to calculate the stamp duty. As your wife is apparently not a permanent resident, or already has property this will be 15%. As for exactly how the government determines the market value, that is actually something I would like to know as well. The problem is that different surveyors value the property at varying amounts, and sometimes the discrepancies can be quite large. A case in point is that a property we were looking at was valued as low as 5.6m, and as high as 7.7m by different surveyors on the same day.

[traineeinvestor]

Apologies if you have already considered this, but the estate/gift tax laws of the EU country where your wife's father is resident may also need to be considered.

Subject to the above, unless the value is sufficiently low that the HK stamp duty is a lesser concern, I personally would have the wife's father's will updated. Obviously, speak to your solicitor to make sure you are not missing anything important.

[redslert]

Have the will done in HK by HK solicitor listing the property with reference/copies to the property deed.

No point saying he owns anything without documentation to show for it.
As you say your father is old and 40yrs ago what he thought may be the case might not be it on paper. Plenty of cases where older brother contributes in property for the family but on paper only has 1 beneficiary - these types of inheritance arguments happens EVERYDAY in HK.

[VillanElle]

Instead of focussing too much on the technicality of the transfer, my advice is to look at the prospect of the property. It’s 40 years old on a sharing basis. A village house? If so, approval letter for occupation by District Lands Office? Is her dad’s name registered on that property? When was the last land search conducted?

There’s no way that you guys are going to be a happy family, right? So what’s the negotiation between both parties. Does your wife want to keep it? In that case buy them out.
The status of that house? Occupied by who? Renovation needed? Or plans for a rebuild?

[VillanElle]

As long as her father’s name is registered on the deeds, you don’t need the deeds to have a will done. He can hire a conveyancing attorney to get copies from land registry.
Just make sure you have sufficient $ on hand as these logistics and negotiations will take time and energy.
Just tell auntie that you have hired a local attorney. That will do to hold her off for awhile.