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In the US the monthly mortgage payment consists of the bank payment for principal and interest, maintenance fee to the building association, property taxes to the government, and property insurance required by the bank. In Hong Kong I am able to figure out the payment to the bank for principal and interest. The maintenance fee I understand is between 1.5 to 5 HKD per square feet per month. For the property taxes and the property insurance, however, I have not been able to find any information. Is it because there is no property tax and no property insurance in Hong Kong?
06.02.2016
Hi, thanks for your question. Will attempt to answer this in two parts:
Hong Kong Property Taxes:
In Hong Kong, "maintenance fee" is referred to as "management fee" and varies from development to development depending on the facilities/services available. This is paid on a monthly basis, separate to one's mortgage payment. Additionally, government rates and rent are levied on properties and have to be paid on a quarterly basis. These are effectively indirect taxes, with both being charged at a % of a property's rateable value i.e. a % of the estimated annual rental value of a property were it to be rented out. Government rates stood at 5% for the 2015-2016 Financial Year, while government rents were fixed at 3%.
If a property is rented out, property tax also has to be paid on rental income. The net assessable value is computed as:
Standard Tax Rate (15%) x Net Assessable Value = (Annual Rental Income – Irrecoverable Rent – Rates paid by owner ) – Statutory allowance for repairs and outgoings (20% allowance)
For details, see: http://www.gov.hk/en/residents/taxes/property/propertycompute.htm
Upon the sale of a property, profit tax and various stamp duties may apply. For details, see: http://www.okay.com/en/property/stampduty.
Hong Kong Property Insurance:
Title insurance is available in HK and provides protection against common defects after the signing of the formal sales and purchase agreement should the purchaser elect to do this. For more details, see: http://www.okay.com/en/property-news/conveyancing-mortgages-and-property-insurance-in-hong-kong/151.
Title insurance is available in HK and provides protection against common defects after the signing of the formal sales and purchase agreement should the purchaser elect to do this. For more details, see: http://www.okay.com/en/property-news/conveyancing-mortgages-and-property-insurance-in-hong-kong/151.
Aside from this, home insurance policies are taken out at the owner's or tenant's discretion. This relates to protection against typhoons, fires, burglaries, burst pipes, third party liabilities and general damage of one's property or belongings, and can be obtained from banks and other insurance providers.
Should you have any further questions or require additional assistance on your Hong Kong property search, please do not hesitate to contact me here.
12.02.2016
Belinda M L Woo
