[andante]

I was thinking.. would it be possible to use my parents' name to purchase a place in hk, then i "rent" it from them and be exempted from tax for the rental amount, and use that amount to pay the bank loan for the apartment..

Wat is, if any, the tax rates like if one rents an apartment out in HK?

And is there any hidden cost for foreigners purchasing properties in HK?

[PDLM]

I don't understand on what basis you think you would be exempt from (presumably) salaries tax on the rental amount. Please would you elaborate?

[kristof]

I might be wrong, but isn't there some kind of tax exemption on the mortgage repayment amount you pay, if so, then why bother?

[andante]

i was told the amt one pays for rental (with receipts) can be submitted via the company, to be considered as housing allowance, thus no taxation for the whole sum.

Am i wrong?

I was thinking along the lines of using the rent allowance to finance a house instead of just renting..

[PDLM]

Yes, you are wrong.

Details of how Housing allowances are taxed are here: http://www.ird.gov.hk/eng/pdf/pam44e.pdf

[Mat]

Agree with PDLM, housing allowances are taxable no matter what !

[nivantj]

Originally Posted by kristof

I might be wrong, but isn't there some kind of tax exemption on the mortgage repayment amount you pay, if so, then why bother?

You are partially right.. There is a tax exemption on mortgage repayment INTEREST amount and not the whole sum...

[nivantj]

andante,
Assuming you buy a property with mortgage (Doesnt matter your name or father's name)...
1). Your rent goes straight away into repayment installment with few +/- adjustment based on installment amount..
2). You pay tax on your housing allowance based on formula given by PDLM
3). You get extra allowance equals to total interest payment on mortgage per year
4). You dont pay Property Tax on rental income as you use it for your own

Advantage..
1). Obviously your housing allowance isnt completely going down the drain.. Every installment reduces your some portion of principal amt..
2). You pay tax on housing allowance in any case but get some allowance as in No 3 above...

Set your own formula and see whats more advantageous..

Correct me if anything wrong above...

[freeier]

rental and mortage payment are treated similarly for tax computation purpose rite ?

anyway at the interest rate charged it wldn't really make sense to buy a flat instead of renting, unless u are very certain of the capital appreciation like all hkers do

[nivantj]

Freeier,

Buying a property at this time or not is a totally different ballgame.. Buying a property is long term decision and interest rates always follow cycles.. Who knows, you might see downward spiral by the end of this year.. On the other hand if you wait for downward interest rate, expect property price hike to more than compensate the effect of interest saving.. So all in all, if you think the property is good priced... time to go for it.