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Updates on Stamp Duty
 
Date:  12 Feb 2018

Updates on Stamp Duty

The Stamp Duty (Amendment) Ordinance 2018 (2018 Amendment Ordinance) was gazetted on 19 January 2018.It extends the time limit for the disposal of the original property from within 6 months to within 12 months.


Background

The Government introduced the New Residential Stamp Duty (NRSD) on 4 November 2016 to increase the AVD rate for residential property transactions to a flat rate of 15% with effect from 5 November 2016. Any instrument executed on or after 5 November 2016 for the sale and purchase or transfer of residential property, unless specifically exempted or provided otherwise, will be subject to the proposed new AVD rate (a flat rate at 15% of the consideration or value of the residential property, whichever is the higher).  The exemptions and exceptions introduced through the 2014 Amendment Ordinance will not be affected. Thus, a  Hong Kong permanent resident (HKPR) acquiring a residential property where he/she is acting on his/her own behalf and does not own any other residential property in Hong Kong at the time of acquisition will continue to be subject to AVD at Scale 2 rates.

On 11 April 2017, the Government announced that it would introduce legislative amendments to tighten up the existing exemption arrangement for HKPR buyers, to the effect that, unless specifically exempted or otherwise provided in the law, acquisition of more than 1 residential property under a single instrument executed on or after 12 April 2017 will be subject to the proposed new AVD flat rate at 15%, even if the purchaser/transferee is a HKPR who is acting on his/her own behalf and does not own any other residential property in Hong Kong at the time of acquisition. 

Latest Development

In accordance with 2018 Amendment Ordinance, the refund mechanism under the existing regime for HKPR buyer who changes his/her single residential property will also be retained. For HKPRS who change their residential property and wish to claim partial refund of the AVD paid on acquisition of the new property, the 2018 Amendment Ordinance extends the time limit for the disposal of the original property from within 6 months to within 12 months after the date of conveyance of the new property if the new property is acquired on or after 5 November 2016.  In other words, a HKPR who is acquiring a residential Property B to replace his only other residential property A can apply for partial refund of AVD.  He will be subject to AVD at Scale 1 as usual in the first instance, but he may seek a refund of the stamp duty paid in excess of that computed under Scale 2 upon proof that Property A has been disposed of within 12 months from the date Property B was assigned to him. 

There is a general time limit for claiming refunds, which is within 2 years after the date of the chargeable instrument for acquisition of Property B or not later than 2 months after the date of the assignment for the disposal of Property A, whichever is the later.