The SCMP carried an article by Jake van der Kamp pointing out that property speculators could avoid the new stamp duty imposed on property owners who sell within two years by buying through a company rather than in their own names. In theory this is true. In practice it's not that simple because:
1. assumption of liabilities: when you buy a company, you will take the company subject to all of its assets and liabilities. A buyer will want to know exactly what those are before proceeding. Put differently, would you buy something which had the potential to contain undisclosed liabilities? I wouldn't, but if I did proceed, I'd want a discount for the additional risk and an indemnity from a credit worthy seller to compensate for the risk involved. Bear in mind that there will be at least one risk which you won't be able to pass back to the seller of the company - the stamp duty liability that would arise if the company sold the property within the two year period;
2. due diligence: for the reason mentioned above, you will want to do due diligence on the company before buying. You won't be able to rely on the audited accounts - even if any exist (which is unlikely for a new company), they only cover you up to the relevant balance date and, in any event, are not a guarantee. Assuming you (i) have the skill set needed to do the due diligence and (ii) can get the confirmations needed, why would you spend the time doing the extra work unless you are going to be compensated for it;
3. running costs: it costs money and time to run a company. Accounts have to be prepared. They have to audited. There are a bunch of forms to be completed each year. the annual costs will be in the vicinity of HKD10,000 pa (+/- a bit). For the average buyer of a self use flat that's a cost which is both meaningful and avoidable, unless the seller is going to compensate you for it;
4. selling: if you want to sell, you'll either have to sell the property or persuade someone else to accept the same risks and costs which you did when you brought the company. If you want to sell the company, you'll be competing against people selling properties directly which are not tainted by the issues associated with selling a company. If you want to sell the property not only are you then left holding an empty company which you must pay to wind down but you will also face the possibility that if the company's original acquisition was deemed to be a business activity, then any gain on sale will be treated as a taxable profit (which issue seldom arises when it is an individual who does the selling). If a gain on sale is treated as a taxable profit, bear in mind that the profit is calculated based on the original purchase price paid by the company - not the implied price you paid when you purchased the company - and you could end up in a situation where you are paying profits tax when you have actually made a loss.
Personally, if I have a choice between buying a property or buying a company which owns a property, I will take the property every time. I would need a lot of assurance/protection and compensation before I would take on the risks, expenses and work involved in buying someone else's company.
Another way of looking at this is to ask why most transactions involving properties are not already structured so that people buy and sell companies which own the properties. You would think that if it was that easy to dodge the stamp duty (which was already up to 4% payable by the buyer before last Friday's changes), everybody would be doing it and buyers would be happy to do so in order to avoid a hefty stamp duty cost. They don't. Outside the realm of high end commercial real estate it is very very unusual for someone to buy a company which owns a property rather than the property itself - for the reasons given above.
I'm sure a lot of creative thinking will be spent trying to avoid the new stamp duty, but I don't see it being as easy to avoid as Mr van der Kamp suggests.