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Renting a room in a Co-owned property / Gifting my share of ownership to wife

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  1. #1

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    Jan 2023
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    Renting a room in a Co-owned property / Gifting my share of ownership to wife

    Hi everyone,

    Our apartment in HK is co-owned by 3 family members in the following proportions-

    Wife- 51%
    Myself- 48%
    Daughter- 1%

    It's a 3 bedroom apartment occupied by me and my wife. Our son would like to rent a room in the house.

    Can it be possible that my son signs a rental agreement only with my wife's share of the house? My wife has no other income, so this rental income under her name will be tax free if she elects for personal assessment.

    Another question, what would be the cost of giving away my proportion of the ownership to my wife? I know that lawyer's cost will about HK$10k. What are the other costs? Can I gift it to her to avoid the stamp duty?


  2. #2

    Join Date
    Feb 2009
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    7,725

    Why do you need a rental agreement with your son? Just let him stay in the apartment and charge him board, not rent.

    emx and VillanElle like this.

  3. #3

    Join Date
    Feb 2007
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    Be very careful when thinking of rental "contract" between direct family members (parent / child) ; as a means of getting the tax benefits. By memory (please double check), the Rental income under Properties Tax. The HK tax office would most likely challenge it as this transaction is not "at arm's length" and this attracts a tax audit of your entire family.
    Other types of taxes such as Profit Tax does not have such a hard requirement for being at arm's length

    Last edited by LifeInHK; 25-01-2023 at 06:40 PM. Reason: typo

  4. #4

    Join Date
    Feb 2021
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    114

    There are other ways to prompt financial responsibilities from kids in a household. A rental agreement is petty.

    the flat is on three names. Technically all need to pay tax, I think.


  5. #5

    Join Date
    Jul 2008
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    And all 3 would need to pay double stamp duty if they ever bought a flat


  6. #6

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    Jan 2023
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    My son receives housing benefits from his company and needs to prove it with proper documentation.


  7. #7

    Join Date
    Feb 2009
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    Quote Originally Posted by writser:
    My son receives housing benefits from his company and needs to prove it with proper documentation.
    I thought this might be why you wanted to do it. It's not allowed.

    https://www.ird.gov.hk/eng/tax/drd.htm


    A deduction for domestic rents will not be allowed in the following circumstances:

    the taxpayer or the taxpayer’s spouse (who is not living apart from the taxpayer) is a legal and beneficial owner of any domestic premises in Hong Kong;

    the landlord of the tenancy concerned (or the principal tenant in the case of sub-tenancy) is an associate of the taxpayer or the taxpayer’s spouse (e.g. the landlord is the taxpayer’s spouse, or a parent, child, sibling or partner of the taxpayer or the taxpayer’s spouse, or a corporation controlled by the taxpayer or the taxpayer’s spouse);
    shri, bdw, emx and 3 others like this.

  8. #8

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    But housing benefit from a company might not be tied to tax incentives. Some companies really pay out rental rebates based on your tenancy agreement.. if that is the case and the son chooses not to claim for tax rental benefit, then it actually works ?


  9. #9

    Join Date
    Oct 2010
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    Quote Originally Posted by freeier:
    But housing benefit from a company might not be tied to tax incentives. Some companies really pay out rental rebates based on your tenancy agreement.. if that is the case and the son chooses not to claim for tax rental benefit, then it actually works ?
    Zero point to a company structuring salary like this unless it it tied to the Rental Reimbursement scheme to lower salary tax.

  10. #10

    Join Date
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    Quote Originally Posted by TheBrit:
    Zero point to a company structuring salary like this unless it it tied to the Rental Reimbursement scheme to lower salary tax.
    Quite a few old / legacy contracts were use it or lose it. If I recall correctly I specifically think old CX contracts were (and are being phased out) based on use or lose type reimbursements. Could be wrong.

    Very rare to find new contracts these days...

    Its all academic distractions.. the essence of it all is that rental reimbursements these days are vastly for tax reasons and/or use/lose for very temp accomodation (like temp hotel / svced apartment) and I'd doubt they apply to the OP / kid.

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