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Adding name to rental/tenancy agreement

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  1. #1

    Adding name to rental/tenancy agreement

    Hi,

    When my husband signed the tenancy agreement we didn't realise that I could claim housing allowance through work. Work said they need to have my name on the tenancy agreement in case they get audited. Our agent has given all these ways to add the name of the tenancy and some are bordering on dodgy (such as simply asking the landlord if they are ok if we just initial the changes and he writes receipts in both our names but never lodge the amended paperwork with the relevant govt department) I was just hoping to reach out to expats and asking if you've ever been in this situation before? If so, how did you and your landlord go about it? I just thought it would be as simple as resigning paperwork?

    Cheers!


  2. #2

    Join Date
    Jul 2014
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    Old London Town
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    186

    Yer I think it is difficult because of the registration process and the duty that has to be paid on a new lease. Not easy because they'd have to cancel the current on and do a brand new one and pay more $$. They might be willing if you offer to cover all their expenses though?


  3. #3

    Well the landlord agreed to add my name provided I cover all costs. I went to take my paperwork to the government stamp department to pay and because it's been more than a month since our first day of rent the penalty was 4x the initial stamp duty! Oh dear... I was just late by 1 day to be within the 30 day period to pay the "normal" amount of stamp duty!


  4. #4

    Join Date
    Oct 2012
    Posts
    217

    I'm in a similar situation. My wife started a new job in September and, in November, they introduced a rental reimbursement scheme that we'd like to take advantage of. The employer will accept leases starting from employment commencement (September), however the lease we have is currently in my name, not hers. What's the best way to maximize our benefit at this point given we're most of the way through the tax year? The options I see here are:

    1) As we can stamp a document up to 30 days after signing, we ask the landlord to sign a new lease starting just under 30 days ago (taking on the cost of stamp duty ourselves), this will allow us to at least claim Dec-Mar. The benefit is marginal, but better than nothing and we're ready for next year.

    2) We could go back an extra month and pay 2x stamp duty penalty, I think we'd also come out slightly on top. Going back further, the 4x or 10x penalty is just too large to make it worth it.

    3) On the IRD website it says that "A tenancy agreement has to be stamped within 30 days from the date of execution. The commencement date of the agreement has no bearing on the time limit." What does this mean? I assume it has forward-starting leases in mind, but could it be used for backward starting ones? Can we set the lease start date as last April, but sign the document today and pay regular stamp duty? (Sounds dodgy...)

    4) There is also a comment on the IRD website the penalty can be reduced depending on circumstances if the disclosure is voluntary. Anybody have any experience with this? This would seem like a genuine reason for "delay" as we're clearly not trying to evade stamp duty or anything.

    Otherwise, any other options for getting my wife's name onto the lease? Any considerations I've missed?


  5. #5

    A mismatch between the name on the lease and the name of the person wanting to take advantage of the tax break for rental payments comes up from time to time.

    Some of the ways suggested to me by agents or others involve making a false statement which could be an offence under the Stamp Duty Ordinance and/or the Inland Revenue Ordinance and are not recommended.

    The two solutions I have seen which work are:

    1. where the employer only required a receipt and not a copy of the lease, I was able to give a receipt to the partner who was not on the lease as she had in fact been the one paying the lease; and

    2. as suggested above, terminate the existing lease and enter into a new one with the landlord. The new lease would start from the date it is entered into so this does not help with payments made before that date under the original lease. Unfortunately, this involves paying another round of stamp duty and it would be unreasonable to expect the landlord to contribute to this.

    jrkob likes this.

  6. #6
    Quote Originally Posted by 441211:
    I'm in a similar situation. My wife started a new job in September and, in November, they introduced a rental reimbursement scheme that we'd like to take advantage of. The employer will accept leases starting from employment commencement (September), however the lease we have is currently in my name, not hers. What's the best way to maximize our benefit at this point given we're most of the way through the tax year? The options I see here are:

    1) As we can stamp a document up to 30 days after signing, we ask the landlord to sign a new lease starting just under 30 days ago (taking on the cost of stamp duty ourselves), this will allow us to at least claim Dec-Mar. The benefit is marginal, but better than nothing and we're ready for next year.

    2) We could go back an extra month and pay 2x stamp duty penalty, I think we'd also come out slightly on top. Going back further, the 4x or 10x penalty is just too large to make it worth it.

    3) On the IRD website it says that "A tenancy agreement has to be stamped within 30 days from the date of execution. The commencement date of the agreement has no bearing on the time limit." What does this mean? I assume it has forward-starting leases in mind, but could it be used for backward starting ones? Can we set the lease start date as last April, but sign the document today and pay regular stamp duty? (Sounds dodgy...)

    4) There is also a comment on the IRD website the penalty can be reduced depending on circumstances if the disclosure is voluntary. Anybody have any experience with this? This would seem like a genuine reason for "delay" as we're clearly not trying to evade stamp duty or anything.

    Otherwise, any other options for getting my wife's name onto the lease? Any considerations I've missed?
    I'm not a tax expert – just a tax payer who's been around a while – so all this is subject to the usual cast of CYA disclaimers:

    1) see previous post. This is doable

    2) legally this is the same as signing a new lease and doesn't change the fact that the original lease was entered into and stamp duty is payable on it

    3) the obligation to pay stamp duty arises from the date on which the lease is entered into which may be different from the date on which the tenancy commences (e.g. you could enter into a lease on 1 January with the tenancy commencing on 1 February – stamp duty is payable within 30 days of 1 January

    4) no experience on my side but you could try calling them up and say there has been a mistake and the lease was entered into in you name instead of your wife's name and ask whether they will remit the stamp duty if you re-exeucte the lease. I have no idea whether they will accept this but it costs nothing to ask.

    A further possibility is to assign the existing lease. This requires a short agreement between the original tenant, the new tenant and the landlord. I don't know whether the assignment would be subject to stamp duty and, if so, at what rate – possibly the agent would know?
    441211 and shri like this.

  7. #7

    Join Date
    Oct 2012
    Posts
    217

    I passed by the original agent today who said option 3 is fine and they have done that before...
    In other words, terminate the original contract, enter a new lease with "signing date" same as today (i.e. pay new round of stamp duty but no penalty, which I'm completely OK with as the savings would far outweigh the stamp duty cost), but have the lease period starting in the past.

    Quote Originally Posted by traineeinvestor:
    3) the obligation to pay stamp duty arises from the date on which the lease is entered into which may be different from the date on which the tenancy commences (e.g. you could enter into a lease on 1 January with the tenancy commencing on 1 February – stamp duty is payable within 30 days of 1 January
    That would be the normal situation, but the agent claims the opposite would be OK too, i.e. commence on 1 Jan but sign on 1 Feb...
    Not 100% convinced, however, the online stamp duty application does indeed let you do this.

  8. #8
    Quote Originally Posted by 441211:



    That would be the normal situation, but the agent claims the opposite would be OK too, i.e. commence on 1 Jan but sign on 1 Feb...
    Not 100% convinced, however, the online stamp duty application does indeed let you do this.
    Yes, it works both days with the trigger for stamp duty being the day of signing the lease. Whether the tenancy commences before or after that date is not relevant ... within reason. I'm sure that if people tried to push this too far to avoid stamp duty, the IRD and the courts would have something to say about it (as they did with the "deferred share trick" that used to be popular many years ago).

  9. #9

    Join Date
    Oct 2012
    Posts
    217

    Btw, when I sign a new updated contract with the new tenant name added onto it, I guess I should provide written notice to cancel the old one? Is it necessary to do it, and how do I even refer to "the old contract" in writing? If I don't, is there some danger I might be asked to pay the same rent twice (once for each contract) if there are two active leases, or is that ludicrous? (of course it's ludicrous but this is HK...) Does the new lease automatically negate the old one?