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Stamp duty anxiety

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  1. #1

    Join Date
    Aug 2017
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    4

    Unhappy Stamp duty anxiety

    Dear all,

    I am really stressed out by conflicting information I have heard about "stamp duty", so any advice from someone more knowledgeable than myself would be very much appreciated. I know this situation is the fault of my own ignorance.

    Last week I signed a tenancy agreement to rent a flat in a New Territories village house. The agent explained that the landlord didn't want to pay stamp duty, but that stamp duty is optional and not paying it would only put the landlord at risk. She said the landlord trusted me and therefore paying stamp duty was not necessary.

    At the time I had no idea what stamp duty was, so I trusted the agent, agreed, and signed the tenancy agreement.

    My colleague subsequently asked if I had paid the stamp duty, which prompted me to do more research online. To the best of my understanding, I have come to learn that:


    • the contract is not legally enforceable if the stamp duty has not been paid
    • not paying stamp duty is illegal


    I'm alarmed by this as I want everything to be 100% legal. I told the agent I wanted to pay the stamp duty, and she pointed out that I had earlier agreed not to and she insisted that neglecting to pay stamp duty is not illegal. Meanwhile, my employer told me the exact opposite that I could "go to prison" for not paying stamp duty.

    Additionally, the agent said I CAN pay the stamp duty myself, but that I shouldn't tell the landlord (???). My employer, on the other hand, says I CANNOT pay it unilaterally as I would need to bring both the tenant's and landlord's copies of the contract.

    Currently I do not trust the agent OR my employer, and I'm more confused than ever. I just want a legal contract and I want to pay all necessary taxes. I am OK to pay all the stamp duty myself. I would like to ask:


    • is paying stamp duty "optional"? the agent is lying or mistaken on this point, right?
    • can I pay the stamp duty myself, unilaterally, using only my single copy of the tenancy agreement?
    • does the fact that it's a village house have any bearing on my landlord's reluctance to pay stamp duty? (i.e. is it illegal to let out a flat in an indigenous village?)
    • if I CAN pay the stamp duty myself, without informing the landlord, does it somehow put the landlord in a bad position?
    • what would you do in my shoes?


    I also didn't pay stamp duty on my current (old) place, and now I'm depressed that I have no legal recourse if the landlord decides to withhold my deposit once I move out.

    Any advise would be much appreciated. Thank you.

  2. #2

    Join Date
    Oct 2010
    Posts
    20,098

    Paying stamp duty is not optional. You are correct that not paying it makes contracts less enforceable.

    I don't know if you can pay it unilaterally.

    Your agent sounds like an idiot.

    I'd call up the revelant Government department and ask them directly.


  3. #3

    Join Date
    Feb 2017
    Posts
    54

    Sounds like a red flag. Call the HK Office.

    My landlord and I both paid stamp duty without question (also in NT village house, welcome!). Although I think the agent has been lax in his submission of the leases as it hasn't arrived in my mailbox yet. He said 2 weeks but the HK website says 5 biz days.

    Good luck!

    Blueprints likes this.

  4. #4

    Join Date
    Dec 2008
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    If stamped the landlord has to pay income tax. You have to stamp within 30 days of execution or else pay a fine that could be as high as 10 times the stamp duty rate.

    Blueprints and gigglinggal like this.

  5. #5

    Join Date
    Feb 2005
    Location
    Island East
    Posts
    4,693

    ive rented this village house for 11 years and not once did we go for the stamp duty so my rent is below market value as the LL doesnt have to pay for income tax but I loose out on the rental deduction for my income tax i save up to 5K on rent from market value.


  6. #6

    Join Date
    Dec 2013
    Location
    Hong Kong
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    10,554
    Quote Originally Posted by Drunken Master:
    If stamped the landlord has to pay income tax. You have to stamp within 30 days of execution or else pay a fine that could be as high as 10 times the stamp duty rate.
    Whose obligation is it to pay though? Landlord or tenant?

  7. #7

    Join Date
    Feb 2005
    Location
    Island East
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    4,693
    Quote Originally Posted by HK_Katherine:
    Whose obligation is it to pay though? Landlord or tenant?
    its usually shared 1/2 each.

  8. #8

    Join Date
    Dec 2013
    Location
    Hong Kong
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    Quote Originally Posted by chuckster007:
    its usually shared 1/2 each.
    Obligation, not general practise. Will the tenant be fined or the landlord (or both) for non compliance? If only the landlord, then the OP can go and pay (or at minimum inform the authorities). If he was under obligation too, keeping quiet might be simpler! (If he wants to stay in the property keeping quiet might also be simpler......!)

    EDIT - ok - link above answered my question. ALL parties. So the OP is liable. Hmm. How long ago was the lease entered into?

  9. #9

    Join Date
    Aug 2017
    Posts
    4

    Thanks for the comments everyone. Very helpful.

    I am now inclined to try to pay the stamp duty unilaterally, but I am worried how my landlord would react if he's trying to evade taxes.

    Don't really wanna throw the landlord under the bus, but I'm not comfortable committing a criminal offence for such a small sum, especially considering Stamp Duty Ordinance says I could be liable to a fine and imprisonment for up to one year.

    Quote Originally Posted by HK_Katherine:
    EDIT - ok - link above answered my question. ALL parties. So the OP is liable. Hmm. How long ago was the lease entered into?
    Signed the contract last week.
    HK_Katherine likes this.

  10. #10

    Join Date
    Dec 2005
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    jrkob likes this.

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