Stamp Duty on Property Transactions in Hong Kong: A Complete Guide

Stamp duty is one of the most significant transaction costs buyers and sellers encounter in Hong Kong's property market. Over the years, the government has introduced multiple layers of stamp duty to manage demand, deter speculation, and raise revenue. Understanding the different types, rates, and available exemptions is essential for anyone buying, selling, or investing in Hong Kong real estate.

Overview of Stamp Duty in Hong Kong

Stamp duty on property transactions in Hong Kong is governed by the Stamp Duty Ordinance (Cap. 117) and administered by the Inland Revenue Department (IRD). Instruments must be stamped within 30 days of execution if signed in Hong Kong, or within 30 days of receipt if signed abroad. Unstamped instruments are inadmissible as evidence in civil proceedings and attract penalties.

There are four main types of stamp duty applicable to residential property transactions:

• Ad Valorem Stamp Duty (AVD) – the base stamp duty on all conveyances and leases
• Buyer's Stamp Duty (BSD) – an additional duty for non-permanent residents and companies
• Special Stamp Duty (SSD) – a resale deterrent for properties sold within three years of acquisition (abolished February 2024)
• Double Stamp Duty (DSD) – previously applicable to non-first-home purchases by permanent residents; abolished February 2024

Non-residential properties (commercial, industrial) are subject to a different (lower) AVD scale and are generally not subject to BSD or SSD.

Ad Valorem Stamp Duty (AVD)

AVD applies to all conveyances on sale of immovable property and agreements for sale. For residential property, there are two scales:

Scale 1 (Standard Rate)

Scale 1 rates apply to residential property acquisitions by HKPRs who already own one or more residential properties in Hong Kong, and to any company (regardless of where incorporated). The flat rate is 7.5% of the consideration or market value (whichever is higher).

Scale 2 (Concessionary Rate)

Scale 2 applies to HKPRs acquiring their first residential property. The Scale 2 rates are graduated:

Consideration	Rate
Up to HK$3,000,000	HK$100 (flat)
HK$3,000,001 – HK$3,528,240	HK$100 + 10% of excess over HK$3,000,000
HK$3,528,241 – HK$4,500,000	1.5%
HK$4,500,001 – HK$4,935,480	HK$67,500 + 10% of excess over HK$4,500,000
HK$4,935,481 – HK$6,000,000	2.25%
HK$6,000,001 – HK$6,642,860	HK$135,000 + 10% of excess over HK$6,000,000
HK$6,642,861 – HK$9,000,000	3%
HK$9,000,001 – HK$10,080,000	HK$270,000 + 10% of excess over HK$9,000,000
HK$10,080,001 – HK$20,000,000	3.75%
HK$20,000,001 – HK$21,739,120	HK$750,000 + 10% of excess over HK$20,000,000
Over HK$21,739,120	4.25%

Non-Residential Properties

For non-residential properties (shops, offices, industrial units), AVD is charged at Scale 2 rates (maximum 4.25%). BSD and SSD do not apply to non-residential properties.

Buyer's Stamp Duty (BSD)

BSD was introduced in October 2012 to cool demand from non-permanent residents and corporate buyers. It is charged in addition to AVD at a flat rate of 7.5% of the consideration or market value (whichever is higher).

BSD applies when the purchaser is a company (incorporated in Hong Kong or elsewhere) or a non-permanent resident of Hong Kong (i.e., a person who does not hold a Hong Kong Permanent Identity Card). BSD does not apply where the purchaser is an HKPR acquiring the property in their own name.

A refund mechanism now applies for eligible non-permanent residents who subsequently obtain HKPR status within 7 years, allowing recovery of BSD paid. This reflects a policy shift to attract talent while retaining the BSD framework.

Special Stamp Duty (SSD) – Abolished February 2024

SSD was introduced in November 2010 to discourage short-term speculation. It applied to residential properties resold within 36 months of acquisition at rates of 10–20% depending on holding period. SSD was abolished effective 28 February 2024. Properties sold on or after that date are no longer subject to SSD regardless of the acquisition date.

Double Stamp Duty (DSD) – Abolished February 2024

DSD (also known as "New Residential Stamp Duty" or NRSD in its most recent form) applied to HKPRs purchasing a second or subsequent residential property. DSD was abolished effective 28 February 2024. HKPRs purchasing additional residential properties now pay Scale 1 AVD (7.5%) only.

The 2024 Policy Relaxations

On 28 February 2024, the Hong Kong government announced a comprehensive relaxation of all property cooling measures:

• SSD abolished: No longer applicable to any residential property sales
• BSD reduced to 7.5% (from 15%) with a refund mechanism for future HKPRs
• DSD abolished: HKPRs purchasing additional residential properties now pay Scale 1 AVD (7.5%) only

These relaxations significantly reduced the total stamp duty burden on property transactions, particularly for investors and second-home buyers. The combined duty on a non-HKPR purchase of a HK$10 million property is now 15% (BSD 7.5% + Scale 1 AVD 7.5%) compared to a potential 30% previously.

Stamp Duty on Leases

Stamp duty also applies to tenancy agreements for immovable property:

Lease Term	Rate
Definite term not exceeding 1 year	0.25% of total rent payable
Definite term of 1–3 years	0.5% of yearly or average yearly rent
Definite term exceeding 3 years, or uncertain term	1% of yearly or average yearly rent

Tenancy agreements are typically stamped within 30 days of execution. The landlord and tenant are jointly liable, though by convention the tenant usually pays.

Stamping Procedures and Timing

Instruments must be submitted to the IRD Stamp Office (or e-stamped via the IRD online portal) within the following timeframes:

• Signed in Hong Kong: Within 30 days of execution
• Signed outside Hong Kong: Within 30 days of receipt in Hong Kong

Late stamping attracts significant penalties:

• Up to 1 month late: 2× the duty
• 1–2 months late: 4× the duty
• More than 2 months late: 10× the duty

For residential properties, the Provisional Agreement for Sale and Purchase (PASP) is typically stamped first, and the formal Agreement for Sale and Purchase (ASP) or Deed of Assignment is treated as a counterpart subject to nominal further duty.

Exemptions and Reliefs

• Intra-group transfers: No AVD (and no BSD) on transfers between associated bodies corporate (where one holds at least 90% of the other's ordinary share capital), subject to conditions and a post-transfer holding period requirement
• Spousal transfers: Transfers pursuant to court orders in matrimonial proceedings are exempt
• Inheritance: Properties passing by will or intestacy benefit from favourable treatment
• Mortgagee sales: Disposals by a mortgagee exercising its power of sale are exempt from SSD (now moot following abolition)
• Charitable gifts: Conveyances to recognised charities are exempt

Practical Considerations for Buyers and Investors

Personal vs. Corporate Holding

Acquiring residential property through a company attracts BSD (7.5%) plus Scale 1 AVD (7.5%), totalling 15%. While corporate structures offer benefits — limited liability, succession planning, ease of transfer via share sale — the stamp duty cost is substantial. Share transfers attract stamp duty on shares at 0.26% of consideration or value (whichever is higher), creating a potential arbitrage. The IRD's anti-avoidance provisions apply to artificial arrangements and should be carefully considered.

Non-Residents and BSD Refund Planning

Non-permanent residents intending to settle in Hong Kong (e.g., holders of employment visas or talent scheme visas) should consider the BSD refund mechanism when planning their property purchase timeline. Early advice can reduce overall duty cost significantly, particularly on high-value properties.

Multiple Properties

HKPRs purchasing additional residential properties now pay Scale 1 AVD (7.5%) following abolition of DSD. On a HK$10 million property, this represents HK$750,000 in stamp duty — a meaningful transaction cost to budget from the outset.

Timing of Instruments

The date of execution of the PASP determines which stamp duty regime applies. In a rapidly changing regulatory environment, timing can make a material difference to duty liability. Legal advice should be sought on the timing of signing and completion, particularly where the buyer's circumstances (e.g., HKPR status) may change.

Conclusion

Hong Kong stamp duty on property transactions has been significantly simplified since the February 2024 relaxations, but buyers, sellers, and investors still face meaningful obligations — particularly non-permanent residents and corporate purchasers. Careful structuring and timely legal advice can reduce duty exposure and avoid costly penalties for late stamping.

If you are planning a property transaction in Hong Kong and would like advice on stamp duty implications, exemptions, or structuring, contact Alan Wong LLP to speak with one of our solicitors.