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Foreign investors may invest in Hong Kong property through a non-resident entity or, more commonly, through a resident entity.
Rental income derived from Hong Kong property is taxable in Hong Kong. If the property owner is a company, whether resident or non-resident, the rental income is liable to profits tax at the rate of 16.5%. If the property owner is an individual, whether resident or non-resident, then the rental income is subject to property tax at the rate of 15%.
Interest on loans used to acquire property can be deducted against rental income if the lender is subject to tax on the interest income in Hong Kong, or if the lender is a financial institution and the loan is not secured or guaranteed by any deposit or loan, the interest from which is not subject to tax in Hong Kong.
Other costs incurred in deriving rental income, such as insurance premiums, repair and maintenance expenses, property management fees, etc., are also deductible. Capital expenditures, such as stamp duty and legal costs incurred in acquiring the property, are not deductible.
Source : PWC
