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Housing allowance and taxes???

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  1. #21

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    there are some deduction for interest expenses in a housing loan.
    not sure about the exact formula though.

    if you don't get any interest subsidy from your company, then buying an apartment might not be the best idea unless you are absolutely sure housing price is goin to go up as well as rental cost.

    Last edited by freeier; 12-09-2006 at 05:03 PM.

  2. #22

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    1) Yes, assuming that your employer does exercise "Proper Control" that you are indeed spending the $11500 on rental.

    2) I'm less expert on mortgage interest (never done it here) but you can't treat hosuing allowance in the same way if it isn't being used to pay rent. Assuming that you are living in the property you have bought then you can claim the mortgage interest as deductible against tax (but only for, I think now, 10 years during your life), There is a lot of detail here: http://www.ird.gov.hk/eng/tax/ind_hli.htm


  3. #23

    Thanks for advice

    Quote Originally Posted by PDLM:
    Put simply, if you spend more than 10% of your total annual gross income (including bonuses) on rental then, all other things being equal, you will pay less tax if you get the amount of your rent specified as Housing Allowance (and your employer does all the necessary things). If you spend less than 10% of your total annual gross income on rent then you would actually pay more tax by having it set up as Housing Allowance.
    Sorry for the late reply however many thanks for your responses, they were very helpful. Kind regards Kathy

  4. #24

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    subletting - housing allowance

    hey there,
    I find this thread extremely informative. especially as I currently spend 30% of my salary on rent.
    I have a question though. The place I'm staying is a shared apartment and I'm subletting from this local guy (who is the main tenant). he seems to be 'scared' of making some kind of contract - suppposedly because subletting is illegal??!?
    anybody have advise on this matter, as i would really like to scale down my salary for tax matters.

    I guess I should get a proper contract with the person i rent from, and have him sign a 'receipt' form every month, which i then pass to my employer - correct?

    many thanks


  5. #25

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    Subletting is not illegal. However, it is very likely specifically forbidden in the main tenancy agreement. Your employer should require both a copy of the receipts but also a copy of the (sub-)tenancy agreement under which you are paying rent. If you can get both of them then fine - you just have to persuade your employer to go through the fairly minor bureaucracy required to file everything consistently.


  6. #26

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    Sorry to open up the old post on housing allowance. By following it so far, am I be correct in the following case of partial reimbursement?

    Monthly salary: 30,000
    Actual Rent paid (M): 10,000
    Rental Reimbursement (M): 4,000

    Annual income = 30,000*12 = 360,000
    RV = 360,000 * 0.1 - (6,000*12) = 36,000-72,000 = -36,000 (Should be zero)

    Assessable income = A.Inc + RV = 360,000 + 0

    1. RV cannot go negative, which can reduce annual income
    2. No tax is levied on housing allowance if it is partially reimbursed and the rent paid (the difference) is larger than 10% of annual income.

    Thank you,


  7. #27

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    Yes, that is my reading of the rules from http://www.ird.gov.hk/eng/pdf/pam44e.pdf although I've never experienced that situation first hand.


  8. #28

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    Thanks PDLM.
    It is very helpful.


  9. #29

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    Just a word of caution. The housing allowance has certain stipulations on it. If it is just a housing allowance, you will be at risk of it being challenged and taxed in full instead of rental value being applied. If it is considered "rent free accommodation provided by the employer" you will be able to claim the rental value. Normally, this means that the employer exercises control over the rent payment such as requiring the rental contract and receipts, in effect the payment is a reimbursement of rent and not a straight allowance.


  10. #30

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    Quote Originally Posted by ray98:
    Just a word of caution. The housing allowance has certain stipulations on it. If it is just a housing allowance, you will be at risk of it being challenged and taxed in full instead of rental value being applied. If it is considered "rent free accommodation provided by the employer" you will be able to claim the rental value. Normally, this means that the employer exercises control over the rent payment such as requiring the rental contract and receipts, in effect the payment is a reimbursement of rent and not a straight allowance.
    Ooopsy, already covered above