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[HONG KONG] A local buyer has purchased a mansion overlooking Hong Kong's exclusive Repulse Bay using a method allowing him to avoid property taxes.
The house may have fetched about HK$670 million (S$124 million), based on the average square-foot valuation of similar properties in the Headland Road neighborhood, according to the agent who brokered the deal.
Raymond Ho, deputy senior director of Residential Development and Investment at property agent Savills Plc, declined to give the exact price of the 7,891 square-foot mansion at 12 Headland Road, or the identity of the buyer, citing client confidentiality.
The property was acquired through the transfer of shares of an offshore company in whose name the property is registered, enabling the deal to go through without paying any local taxes, according to Mr Ho.
He said it was bought by "an experienced buyer from Hong Kong" who isn't a property developer. Mr Ho said he didn't know what the buyer plans to do with the mansion.
The sale is the latest example of how Hong Kong's wealthy are finding legal ways around restrictions to cool surging property prices in the world's least affordable city.
Hong Kong's leaders in November announced new measures raising the base stamp duty to 15 per cent for all but first-time local home buyers. Under Hong Kong's rules, though, buyers purchasing property through a shell company registered offshore don't have to pay any taxes.
By choosing this route, the buyer avoided a potential tax bill of HK$100.5 million, assuming he holds other properties registered under his name and isn't considered a first-time buyer. If the property had changed hands in the previous six months, the buyer would have had to pay an additional stamp duty of HK$100.5 million.
In 2011, more than half of Hong Kong's homes worth more than HK$20 million were sold via companies, according to government data. The government in 2013 began taxing new companies created to buy properties using this method. However, thousands of properties are still held in this way and can offer significant tax savings when they are resold.