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1. I let a property on 1 July 2004 for $30,000 per month. Rates for the 3 quarters to 31 March 2005 paid by me amounted to $12,000. How is Property Tax computed for 2004/05? Do I have to pay Provisional Property Tax for 2005/06?
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HK$
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Rent for 9 months ($30,000 x 9)
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270,000
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Less: rates paid by owner
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(12,000)
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258,000
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Less: 20% allowance for repairs and outgoings
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(51,600)
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Net assessable value (NAV)
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206,400
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2004/05 Property Tax @16%
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33,024
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Calculation of Provisional Property Tax for 2005/06 is based on the NAV for 2004/05, but grossed up to 12 months, as follows:
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HK$
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Estimated NAV ($206,400 [see above] x 12 / 9)
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275,200
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2005/06 Provisional Property Tax @16%
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44,032
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You will receive a Property Tax demand note that carries two components:
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$
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2004/05 Property Tax
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33,024
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2005/06 Provisional Property Tax
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44,032
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Total tax payable
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77,056
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2. My solely-owned property yielded a rental income of $30,000 per month until the tenant left on 31 May 2005. It was let again after 3 months' vacancy at a reduced monthly rental of $24,000. Can I apply to pay less property tax (or to holdover/defer payment of provisional tax)?
Yes, compared with that for 2004/05, your rental income for 2005/06 would be reduced by more than 10%. You can apply for a partial holdover of the provisional property tax on the grounds of rent reduction.
Your written application must be received by the Inland Revenue Department not later than 28 days before the due date for payment of the provisional tax, or 14 days after the issue of the relevant demand note, whichever is the later. The amount of provisional tax to be held-over would be $16,896 ($46,080 ¡V $29,184), computed as follows:
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Amount of provisional tax demanded
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HK$
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Assessed assessable value ($30,000 x 12)
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360,000
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Less: 20% allowance for repairs and outgoings
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(72,000)
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Estimated NAV, per demand note
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288,000
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2005/06 Provisional Property Tax charged @16%
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46,080
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Computation for reduced tax (1/4-31/5/2005 and 1/9/2005-31/3/2006)
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HK$
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Estimated assessable value ($30,000 x 2 + $24,000 x 7)
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228,000
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Less: 20% allowance for repairs and outgoings
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(45,600)
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Estimated NAV
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182,400
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Revised 2005/06 Provisional Property Tax @16%
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29,184
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3. Can I apply for holdover of provisional tax on other grounds?
You may apply for complete or partial holdover of provisional tax within the time limit described above if any one of the following conditions can be satisfied:
- a reduction in more than 10% of provisional year's estimated assessable value (please refer to the figures shown in the demand note);
- you cease to own the property;
- you have chosen the Personal Assessment and it would likely reduce your overall tax bill; or
- you have raised an objection against the Property Tax assessment for the preceding year.
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