Stamp duty on buying and renting: who pays and how it is calculated
A purchase attracts ad valorem stamp duty, based on the price or the value of the property. A tenancy agreement must be stamped, with duty based on the term and the rent. Both must be paid within a time limit after signing, at the rates published by the Inland Revenue Department.
Buying: ad valorem stamp duty
Ad valorem stamp duty is charged on the price or the value of the property, whichever is higher, at rates that rise with the amount. When the price is just above a band, the duty is worked out with marginal relief, so that a slightly higher price does not cause a sharp jump in duty.
Residential and non-residential property use different scales of rates. You can work out the actual duty from the price with the stamp duty calculator, which shows the effective date and source of the rates it uses.
Renting: stamp duty on a tenancy agreement
Paying stamp duty on a tenancy agreement is commonly called “stamping” the agreement. The duty depends on the term: for a term of one year or less, 0.25% of the total rent for the term; over one year and up to three years, 0.5% of the average yearly rent; over three years, 1% of the average yearly rent. Each duplicate of the tenancy agreement carries a further fixed duty of HK$5.
Who pays the duty is for the landlord and tenant to agree, and they commonly pay half each. Only a stamped tenancy agreement can be used as evidence in court.
| Term | Basis | Rate |
|---|---|---|
| One year or less | Total rent for the term | 0.25% |
| Over one year and up to three years | Average yearly rent | 0.5% |
| Over three years | Average yearly rent | 1% |
Time limits and how to pay
Agreements for sale and purchase and tenancy agreements must both be stamped within a set time after signing, and a penalty is charged for late stamping. Stamp duty on a purchase is usually handled by the solicitor. A tenancy agreement can be stamped by the landlord, the tenant or the agent through the Inland Revenue Department's e-Stamping service.
Common questions
Does the buyer or the seller pay the stamp duty?
By law both buyer and seller are liable, but by market practice the buyer pays the ad valorem stamp duty, and the agreement for sale and purchase says so.
Does the landlord or the tenant pay the stamp duty on a tenancy agreement?
It is for the two of them to agree. Landlord and tenant commonly pay half each, and the tenancy agreement says so.
What happens if a tenancy agreement is not stamped?
An unstamped tenancy agreement cannot be used as evidence in court, and a penalty is charged for late stamping.