Demand-side Management Measures for Residential Properties

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On 28 February 2024, the Government proposed to cancel all demand-side management measures for residential properties with immediate effect, that is, no Special Stamp Duty ("SSD"), Buyer’s Stamp Duty ("BSD") or Ad Valorem Stamp Duty ("AVD") at 7.5% under Part 1 of Scale 1 needs to be paid for any residential property transactions starting from that day.

The Stamp Duty (Amendment) Ordinance 2024 ("2024 Amendment Ordinance") was published in the Gazette on 19 April 2024 to give effect to the above proposal. Under the 2024 Amendment Ordinance, any instrument executed on or after 28 February 2024 for the sale and purchase or transfer of residential properties are no longer subject to SSD and BSD. The AVD rate of 7.5% under Part 1 of Scale 1 is amended to the same as those of AVD at Scale 2.

Mr. A has acquired a residential property ("Property X") on 1 March 2022. On 27 February 2024, Mr. A executed a provisional agreement for sale and purchase ("PASP") to dispose of Property X to Mr. B. Mr. B is a non-Hong Kong permanent resident ("non-HKPR"). They will sign a formal agreement for sale and purchase ("ASP") on the same terms with the PASP on 18 March 2024. What is the amount of stamp duty payable in this case?

In this case, Property X is regarded as having been disposed of by Mr. A and acquired by Mr. B on the date of PASP (i.e. 27 February 2024, before 28 February 2024). As Property X has been held by Mr. A for more than 12 months but for 24 months or less, SSD at the rate of 10% will be payable. Further, Mr. B is a non-HKPR, BSD and AVD under Part 1 of Scale 1 both computed at the rate of 7.5% (before amendment) will be payable on the PASP.

Mr. C is a HKPR and owns a residential property in Hong Kong. He entered into a PASP to acquire another residential property on 28 February 2024. He will sign an ASP on the same terms with the PASP on 12 March 2024. What is the amount of stamp duty payable in this case?

In this case, the subject residential property is regarded as having been acquired by Mr. C on the date of PASP (i.e. 28 February 2024). Since Mr. C has already owned another residential property in Hong Kong, AVD rate under Part 1 of Scale 1 will apply. However, the rates after amendment are the same as those of Scale 2 (“Scale 2 Equivalent”). In other words, the amount of the stamp duty payable is the same as that computed by applying Scale 2 rates.

List out in a table the stamp duty payable under different scenarios after the announcement of the abolishment of the demand-side management measures.

	Vendor(V)	Perchaser(P)	Date of PASP	Date of ASP	Stamp Duty payable
	Vendor(V)	Perchaser(P)	Date of PASP	Date of ASP	SSD	BSD	AVD
1	V disposed of a residential property within 24 months after acquisition	P is a non-HKPR	Before 28/2/2024 but on or after 25/10/2023	On or after 28/2/2024	✓	✓	Part 1 of Scale 1 rate of 7.5%
2	- ditto -	- ditto -	On or after 28/2/2024	On or after 28/2/2024	✘	✘	Scale 2 Equivalent
3	- ditto -	P is a HKPR and does not own another residential property	Before 28/2/2024 but on or after 25/10/2023	On or after 28/2/2024	✓	✘	Scale 2
4	- ditto -	- ditto -	On or after 28/2/2024	On or after 28/2/2024	✘	✘	Scale 2
5	- ditto -	P is a HKPR and owns another residential property	Before 28/2/2024 but on or after 25/10/2023	On or after 28/2/2024	✓	✘	Part 1 of Scale 1 rate of 7.5%
6	- ditto -	- ditto -	On or after 28/2/2024	On or after 28/2/2024	✘	✘	Scale 2 Equivalent
7	V disposed of a residential property more than 24 months after acquisition	P is a non-HKPR	Before 28/2/2024 but on or after 25/10/2023	On or after 28/2/2024	✘	✓	Part 1 of Scale 1 rate of 7.5%
8	- ditto -	- ditto -	On or after 28/2/2024	On or after 28/2/2024	✘	✘	Scale 2 Equivalent
9	- ditto -	P is a HKPR and does not own another residential property	Before 28/2/2024 but on or after 25/10/2023	On or after 28/2/2024	✘	✘	Scale 2
10	- ditto -	- ditto -	On or after 28/2/2024	On or after 28/2/2024	✘	✘	Scale 2
11	- ditto -	P is a HKPR and owns another residential property	Before 28/2/2024 but on or after 25/10/2023	On or after 28/2/2024	✘	✘	Part 1 of Scale 1 rate of 7.5%
12	- ditto -	- ditto -	On or after 28/2/2024	On or after 28/2/2024	✘	✘	Scale 2 Equivalent