tag:blogger.com,1999:blog-25714039.post4984519106321759789..comments2023-10-26T00:17:28.411+08:00Comments on A Private Portfolio: Another unsolicited offer (1)traineeinvestorhttp://www.blogger.com/profile/05179861120801348035noreply@blogger.comBlogger2125tag:blogger.com,1999:blog-25714039.post-71478840255495886612007-11-26T19:48:00.000+08:002007-11-26T19:48:00.000+08:00Hi RaphaelMy understanding of the Hong Kong tax po...Hi Raphael<BR/><BR/>My understanding of the Hong Kong tax position is essentially that investors will be taxed either:<BR/><BR/>(i) as passive investors on rental income (less interest cost and rates which are the only deductables in addition to the standard "broad brush"20% allowance); or<BR/><BR/>(ii) as traders (or persons who run a business of trading real estate) in which case the gain on disposal will also be taxable.<BR/><BR/>Whether a person falls within (i) or (ii) is largely a matter of intention and there are many factors which the revenue authorities may take into account as evidence of intention. Time of holding is one factor, but there are many others as well.<BR/><BR/>The position is different if you buy through a company rather than in yoru own name as companies can deduct more expenses.<BR/><BR/>I'm not sure what the rules are on deductions on sale if you are subject to tax. Intuitively, since a tax on profits on a sale will only arise if the vendor is carrying on a business, it would be logical for all expenses to be deductable.<BR/><BR/>Needless to say I am not a professional tax adviser.traineeinvestorhttps://www.blogger.com/profile/05179861120801348035noreply@blogger.comtag:blogger.com,1999:blog-25714039.post-67333255678592830962007-11-26T10:43:00.000+08:002007-11-26T10:43:00.000+08:00I'm interested to see your comment regarding profi...I'm interested to see your comment regarding profit tax. I had thought that with any investment property (ie. non-self use) you would have to pay profit tax on the capital gains regardless of whether you hold for the short term or long term?<BR/><BR/>Maybe this isn't correct? Any thoughts?<BR/><BR/>As you mention, profit tax has a huge impact on the internal rate of return for a property investment so I'd be very interested to find out more about this!<BR/><BR/>Another question, can you deduct costs (e.g. mortgage interest) from investment properties when calculating the part of the capital gains that are subject to tax?<BR/><BR/>Thanks!Anonymousnoreply@blogger.com