Property questions for US Citizen buying in HK

[BenderBends]

so we are getting closer and closer to buying our 1st property...and its going to be in HK. but we have a few questions...

We are US citizens, and we are not PR, but have both been here on work visas for about 5 years.

gohome.com.hk mortgage calculator shows a lot of the stamp fees and information for buying the home and mortgage rates. what we would like to know is this (assuming $5M home):

1. what is the HK tax liability if we file separately?
2. what is the HK tax liability if we file jointly?
3. what is the USA tax liability if we file separately?
4. what is the USA tax liability if we file jointly?

[PDLM]

I can only speak to HK taxes.

If you buy a home and live in it then the only tax implication in Hong Kong is that you can offset your mortgage interest against other taxable income. You can do this for up to 10 years in total. There is no capital gains tax on selling the property you have lived in.

If you are buying a property as an investment to rent out then it's a bit more complex.

If you are married then you should always file jointly in HK - the Inland Revenue will calculate the tax jointly and separately and charge you the lower amount.

[BenderBends]

well...we arent married yet. and we dont want to rush through a ceremony or legal license just to buy, so thats why i was questioning filing separately.

we would definitely be living in it...so that sounds like it will be easier for estimating.

so there isnt any HK property tax or anything like that? instead we just get a benefit of deducting mortgage interest?

[PDLM]

There is a Property Tax if you buy property purely as an investment and get rental income from it. If you buy it and live in it then the only taxes are Stamp Duty, and Government Rent & Rates.

You can't file together in HK if you aren't married.

HK taxes are summarised in the IRD's Tax Guide.

[Oldtimer]

If you are buying the property in both names, make sure to specify the percentage each owns.
This way both get benefit of mortgage interest as per the percentage owned.

[BenderBends]

so i assume there is no US tax implications considering I would not be renting it out. right?

[PDLM]

I don't know, but from Wiki it seems that you are unlikely to have any capital gains tax liability in the US on this size of purchase.

[cloud9cruiser]

You are supposed to pay tax on property in Hong Kong to the US IRS even thought it makes no sense. They want a piece of whatever you make overseas so tread carefully. If you find a solution to not pay tax on your property in HK to the US, let me know! I'm looking for one!

[fth]

The only other implication I see is on your deductions. For US tax purposes you can deduct your overseas housing expenses over and above a certain floor (a proportion of a mid ranking civil servant's salary), subject to a cap which is quite high for HK.

If you own your deductibles may be lower versus renting.

Given the alleged bubble in the HK property market at the moment you might want to consider buying a property for investment purposes in the US which you can rent out.