Hong Kong Budget: Tax rate cut for first-time home buyers

HONG Kong is lowering the tax rate for first-time buyers of properties up to HK$9 million (S$1.5 million) in a bid to help people climb the housing ladder.

Financial Secretary Paul Chan announced the plan in his budget speech on Wednesday (Feb 22), saying the proposal aims to ease “the burden on ordinary families of purchasing their first residential properties, particularly small and medium residential units”.

The measure will benefit 37,000 buyers and cost the government about HK$1.9 billion a year, he added.

The current tax for such buyers differs by the values of the properties.

With the new measure, which will be effective today, homes with a higher value will be taxed at a lower rate than before.

For an apartment valued at HK$8 million, for example, the tax rate for first-time buyers with Hong Kong citizenship will be cut to 3 per cent from 3.75 per cent.

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Tax rate for properties worth more than HK$9 million will remain the same at 4.25 per cent.

The plan may also give a boost to the city’s property market, which saw prices slump 16 per cent last year as a result of higher interest rates.

Slower rate hikes and a lower tax burden could encourage more new buyers to purchase homes. BLOOMBERG