Like Tree2Likes
  • 1 Post By orel100x
  • 1 Post By bdw

Housing deduction actually increase my tax payable?

Closed Thread
  1. #1

    Housing deduction actually increase my tax payable?

    https://www.ird.gov.hk/eng/ese/st_co..._20/stcfrm.htm

    When I input my rent (10% of my salary maximum) in "Value of all places of residence provided by employer or associated corporation" it actually increases my tax payable whereas it should decrease it. I don't fully understand

  2. #2

    Join Date
    Sep 2012
    Location
    香港
    Posts
    1,162

    There is a break even point around rent being 10-11% of your salary. When it is above, this scheme will reduce the tax, and won't otherwise.

    traineeinvestor likes this.

  3. #3

    Join Date
    Feb 2009
    Posts
    8,280

    If your rent is more than 10% of your income, then it's worthwhile to claim the deduction. Do you have a high salary and low rent? In that case is pointless.

    traineeinvestor likes this.

  4. #4

    Previous thread here: https://geoexpat.com/forum/175/thread342887.html

    As orel100x and bdw have pointed out, whether it's worthwhile depends on where your rent is relative to your income.


  5. #5
    Quote Originally Posted by orel100x:
    There is a break even point around rent being 10-11% of your salary. When it is above, this scheme will reduce the tax, and won't otherwise.
    Quote Originally Posted by bdw:
    If your rent is more than 10% of your income, then it's worthwhile to claim the deduction. Do you have a high salary and low rent? In that case is pointless.
    Quote Originally Posted by traineeinvestor:
    Previous thread here: https://geoexpat.com/forum/175/thread342887.html

    As orel100x and bdw have pointed out, whether it's worthwhile depends on where your rent is relative to your income.
    On this period my rent was about 25% of my income but I still input 10% as the system would not let me put a higher number. However I owe more tax when I claim this than when I put 0 so it does not make sense?

  6. #6

    Join Date
    May 2009
    Posts
    1,289
    Quote Originally Posted by TheRoadAhead:
    On this period my rent was about 25% of my income but I still input 10% as the system would not let me put a higher number. However I owe more tax when I claim this than when I put 0 so it does not make sense?
    Did you forget to deduct the rent?
    If your salary is 100 then deduct 25 it becomes 75 and add 10 is 85
    100-25+10=85
    So not possible you pay more tax as you pay tax on 85 instead of 100.

    Unless your flat rate is the lower of the two then I think it can happen.

  7. #7
    Quote Originally Posted by Sith:
    Did you forget to deduct the rent?
    If your salary is 100 then deduct 25 it becomes 75 and add 10 is 85
    100-25+10=85
    So not possible you pay more tax as you pay tax on 85 instead of 100.

    Unless your flat rate is the lower of the two then I think it can happen.
    Let's assume:
    - Income: 500,000
    - MPF contributions: 18 000
    - Rent: 15000/month

    The system will not allow to claim more than 10% of my income in "Value of all places of residence provided" so I input 50 000. My taxable income is then higher that if I left it at 0

    Nowhere in the examples they deduct the rent from 'Income for the year of assessment'. I think this only works when employers pays the apartment of their employees?


  8. #8

    Join Date
    May 2009
    Posts
    1,289
    Quote Originally Posted by TheRoadAhead:
    Let's assume:
    - Income: 500,000
    - MPF contributions: 18 000
    - Rent: 15000/month

    The system will not allow to claim more than 10% of my income in "Value of all places of residence provided" so I input 50 000. My taxable income is then higher that if I left it at 0

    Nowhere in the examples they deduct the rent from 'Income for the year of assessment'. I think this only works when employers pays the apartment of their employees?

    You have to deduct the rent you paid (15x12=180k) from your income.
    So instead of 500k you put in 320k.
    Btw this only applies if your company provides the rental reimbursement program.