Another crazy housing qn

[andante]

I was thinking.. would it be possible to use my parents' name to purchase a place in hk, then i "rent" it from them and be exempted from tax for the rental amount, and use that amount to pay the bank loan for the apartment..

Wat is, if any, the tax rates like if one rents an apartment out in HK?

And is there any hidden cost for foreigners purchasing properties in HK?

[PDLM]

I don't understand on what basis you think you would be exempt from (presumably) salaries tax on the rental amount. Please would you elaborate?

[kristof]

I might be wrong, but isn't there some kind of tax exemption on the mortgage repayment amount you pay, if so, then why bother?

[andante]

i was told the amt one pays for rental (with receipts) can be submitted via the company, to be considered as housing allowance, thus no taxation for the whole sum.

Am i wrong?

I was thinking along the lines of using the rent allowance to finance a house instead of just renting..

[PDLM]

Yes, you are wrong.

Details of how Housing allowances are taxed are here: http://www.ird.gov.hk/eng/pdf/pam44e.pdf

[Mat]

Agree with PDLM, housing allowances are taxable no matter what !

[freeier]

rental and mortage payment are treated similarly for tax computation purpose rite ?

anyway at the interest rate charged it wldn't really make sense to buy a flat instead of renting, unless u are very certain of the capital appreciation like all hkers do

[kostas]

Mortgage interest payment is exempted only for a few years.. Below is the excerpt from the guide booklet:

7.3 Home Loan Interest

• You may claim deduction of interest paid by you in respect of a loan obtained for the purpose of acquiring a property in Hong Kong which was used by you as your place of residence, provided that the loan was secured by a mortgage or charge and the lending institution providing the loan to you was an approved one.
• This deduction can be claimed under Salaries Tax or Personal Assessment. It is granted to each person for 7 years of assessment, whether consecutively or not.