Special Stamp Duty (SSD)

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The Stamp Duty (Amendment) Ordinance 2024 ("2024 Amendment Ordinance") was published in the Gazette on 19 April 2024. Under the 2024 Amendment Ordinance, any instrument executed on or after 28 February 2024 for the sale and purchase or transfer of residential property is no longer subject to SSD. The following FAQs on SSD are only applicable to residential properties acquired on or after 20 November 2010 and was disposed of before 28 February 2024.

Under what circumstances will SSD be payable?

Unless the transaction is exempted from SSD, the liability to SSD will arise if all of the following 3 conditions are met:

(i)	the transaction involves the sale and purchase or transfer of a residential property;
(ii)	the property is acquired by the seller or transferor on or after 20 November 2010; and
(iii)	the property is disposed of (which includes a resale or transfer) by the seller or transferor within 24 months (if the property was acquired between 20 November 2010 and 26 October 2012, or was acquired on or after 26 October 2021 and was disposed of on or after 25 October 2023 but before 28 February 2024) or 36 months (if the property was acquired on or after 27 October 2012 and was disposed of before 25 October 2023) from the date of acquisition.

In other words, so long as the residential property was acquired by a person before 20 November 2010, the subsequent disposal of that property by him at any time will not be subject to SSD.

Will SSD apply to the confirmor sale of a property which is acquired by the seller on or after 20 November 2010?

Confirmor sale of any residential property which is acquired by the seller on or after 20 November 2010 and disposed of within 24 months (if the property was acquired between 20 November 2010 and 26 October 2012, or was acquired on or after 26 October 2021 and was disposed of on or after 25 October 2023) or 36 months (if the property was acquired on or after 27 October 2012 and was disposed of before 25 October 2023) from the date of acquisition is SSD-chargeable.

Who will be liable to pay the SSD?

The seller and the buyer to the property transaction and any person who uses the instrument are jointly and severally liable for paying the SSD. However, any person who merely uses an instrument of immovable property (other than the parties executing the instrument) to deduce the title of the property will not be regarded as the liable person.

The seller and the buyer should, by consent, specify in the Provisional Agreement for Sale and Purchase (PASP) and the Agreement for Sale and Purchase (ASP) which party (the buyer or the seller) shall pay the SSD. If it is agreed that the SSD should be paid by the seller, we suggest the buyer specify in the PASP and ASP that he will withhold part of the sale proceeds to pay for the SSD.

For SSD purposes, how to define the date of acquisition and the date of disposal of a property?

For SSD purposes, a person acquires a residential property on the date he enters into a chargeable agreement for sale as purchaser to purchase the property. If there is no such chargeable agreement for sale, the date of a conveyance to acquire the property is the date of acquisition. As a corollary, a person disposes of a residential property on the date he enters into a chargeable agreement as vendor to dispose of the property. If there is no such chargeable agreement for sale, the date of a conveyance to dispose of the property is the date of disposal.

Chargeable agreement for sale includes both PASP and ASP. Where there is more than one chargeable agreement for sale in a residential property transaction entered into between the same parties and on the same terms, the date of the first agreement will be taken as the date of acquisition by the buyer or the date of disposal by the seller.

Will SSD be applicable to buyers who have entered into a PASP before 20 November 2010 and signed an ASP on or after that date?

For SSD purposes, a PASP is a chargeable agreement for sale. The buyer who entered into a PASP for purchase of a residential property before 20 November 2010 is regarded as having “acquired” the property before that date, and SSD will NOT apply to the disposal of the property regardless of the period of holding.

How to calculate SSD? What are the rates of SSD?

SSD is calculated as follows:

the stated consideration or the market value of the property (whichever is the higher) x the applicable rate
The applicable rates of SSD based on the holding period of the property by the seller or transferor before disposal -

If the property was acquired between 20 November 2010 and 26 October 2012,

(i)	15% if the property has been held for six months or less;
(ii)	10% if the property has been held for more than six months but for 12 months or less; and
(iii)	5% if the property has been held for more than 12 months but for 24 months or less.

If the property was acquired on or after 27 October 2012 and was disposed of before 25 October 2023, -
(i)		20% if the property has been held for six months or less;
(ii)		15% if the property has been held for more than six months but for 12 months or less; and
(iii)		10% if the property has been held for more than 12 months but for 36 months or less.

If the property was acquired on or after 26 October 2021 and was disposed of on or after 25 October 2023, -
(i)		20% if the property has been held for six months or less;
(ii)		15% if the property has been held for more than six months but for 12 months or less; and
(iii)		10% if the property has been held for more than 12 months but for 24 months or less.

For SSD purposes, how to count the holding period of a residential property?

The counting of the property holding period is based on calendar months, i.e. the period from a certain day in a month to the preceding day in the following calendar month is counted as 1 month. For example, if a property was acquired on 20 November 2010 and was disposed of on 19 May 2011, the holding period of the property is exactly 6 months.

Under what circumstances will SSD be exempted?

Payment of the SSD is exempted in the following cases –

(i)

Nomination of a close relative(s) (that is, the spouse, parents, children, brothers or sisters) of the original purchaser(s) to take up the assignment of the residential property. If there is more than one nominee, the nominees must also be close relative(s); and sale or transfer of the residential property to a close relative(s).

(ii)

Addition / deletion of name(s) of a person(s) to / from a chargeable agreement for sale or a conveyance on sale in respect of the residential property if the person(s) is the close relative(s) of the original purchaser(s).

(iii)

Sale or transfer of residential properties by a court order or pursuant to a court order. The exemption covers a compulsory sale of residential property under a Compulsory Sale Order granted under the Land (Compulsory Sale for Redevelopment) Ordinance (Cap.545), and also any sale of residential property where the residential property was transferred to or vested in the vendor by or pursuant to any decree or order of any court, including a foreclosure order obtained by the mortgagee whether or not it falls under the definition of a financial institution within the meaning of section 2 of the Inland Revenue Ordinance (Cap.112). For this purpose, “court” means any court of the Hong Kong Special Administrative Region of competent jurisdiction.

(iv)

Sale of mortgaged residential properties in various forms by a mortgagee which is a financial institution within the meaning of section 2 of the Inland Revenue Ordinance, or by a receiver appointed by such a mortgagee.

(v)

Sale or transfer of residential properties (including bare sites) after demolishing the original residential properties thereon for constructing redeveloped ones.

(vi)

Sale of the estate of a deceased person, which involves residential property, by the executor or personal representative, and sale or transfer of a residential property by a person whose property is inherited from a deceased person's estate or passed to that person under a will, the law of intestacy or right of survivorship.

(vii)

Sale or transfer of residential properties between associated bodies corporate.

(viii)

The residential property sold relates solely to a bankrupt's estate or the property of a company which is being wound up by the court by reason of its inability to pay debts.

(ix)

Sale or transfer of residential properties to the Government.

(x)

Gift of residential properties to charitable institutions exempted from tax under section 88 of the Inland Revenue Ordinance.

What is the definition of parents, spouse, children, brothers and sisters?

For SSD purposes, the Stamp Office will adopt the ordinary meaning and accepts persons who are blood-related, half blood-related, and also persons who have spouse relationship, adoptive or step relationship, as the parents, spouse, children, brothers or sisters of the nominator, seller or transferor (as the case may be).

10.

If a property is transferred to a person from his spouse, parents, children, brothers or sisters by way of gift on or after 20 November 2010 and is disposed of within 24 months (if the property was acquired between 20 November 2010 and 26 October 2012, or was acquired on or after 26 October 2021 and was disposed of on or after on 25 October 2023) or 36 months (if the property was acquired on or after 27 October 2012 and was disposed of before 25 October 2023), will SSD be payable?

Sale or transfer of a residential property to spouse, parents, children, brothers or sisters is exempted from SSD. However, if the donee disposes of the residential property within 24 months (if the property was acquired between 20 November 2010 and 26 October 2012 or was acquired on or after 26 October 2021 and was disposed of on or after 25 October 2023) or 36 months (if the property was acquired on or after 27 October 2012 and was disposed of before 25 October 2023) from the date of the deed of gift, the transaction is SSD-chargeable.

11.

If I inherit a residential property from a deceased person's estate on or after 20 November 2010, will I be liable to SSD if I dispose of the property within 24 months (if the property was acquired between 20 November 2010 and 26 October 2012, or was acquired on or after 26 October 2021 and was disposed of on or after 25 October 2023) or 36 months (if the property was acquired on or after 27 October 2012 and was disposed of before 25 October 2023)?

Sale or transfer of a residential property which is inherited from a deceased person's estate under a will, the law of intestacy or right of survivorship by a beneficiary is exempted from SSD. Therefore, SSD will NOT apply to the disposal of the inherited property even if it is disposed of within 24 months (if the property was acquired between 20 November 2010 and 26 October 2012, or was acquired on or after 26 October 2021 and was disposed of on or after 25 October 2023) or 36 months (if the property was acquired on or after 27 October 2012 and was disposed of before 25 October 2023) from the date of inheritance.

12.

Mr. A signed a chargeable agreement for sale to purchase a residential property on 1 January 2011. Subsequently, Ms. B (Ms. B is not the close relative of Mr. A) was added to the assignment signed on 31 January 2011 as one of the transferees. Will Mr. A and Ms. B be liable to SSD?

In the above situation, Mr. A has disposed of part of the property to Ms. B within 24 months. As Ms. B is not the close relative of Mr. A, there will be no exemption of SSD. Therefore, SSD is payable on the part of the consideration representing Ms. B's share of the property when Ms. B was added to the assignment as one of the transferees.

13.

If a person disposes of a property within 24 months (if the property was acquired between 20 November 2010 and 26 October 2012, or was acquired on or after 26 October 2021 and was disposed of on or after 25 October 2023) or 36 months (if the property was acquired on or after 27 October 2012 and was disposed of before 25 October 2023) without making any gain, will SSD be exempted?

SSD is not a charge on gain or profit. It is a levy imposed on instruments (i.e. agreement for sale or conveyance). Therefore, irrespective of whether the residential property is sold at a gain or at a loss, SSD is payable by reference to the holding period and the stated consideration or the market value of the property (whichever is higher).

14.

If a person makes a gain in disposing of a property within 24 months (if the property was acquired between 20 November 2010 and 26 October 2012, or was acquired on or after 26 October 2021 and was disposed of on or after 25 October 2023) or 36 months (if the property was acquired on or after 27 October 2012 and was disposed of before 25 October 2023) and has paid SSD, will he still be liable to profits tax?

SSD is a levy on agreements for sale and conveyances on sale whereas profits tax is a charge on profits derived from property trading activities. They are two separate and distinct taxes. If the property transaction amounts to a trade or an adventure in the nature of trade, the seller will have to pay profits tax on the profits so derived notwithstanding that SSD has been paid.

15.

Will the amount of SSD paid be deductible in calculating the assessable profits?

If the SSD is paid by the seller and it is a business expense, the amount can be deducted in computing the assessable profits derived from property transactions.

16.

When should SSD be paid?

A chargeable agreement for sale is to be stamped with SSD at the same time as that for the ad valorem stamp duty, i.e. in general, within 30 days after the date on which the agreement for sale is entered into. Likewise, a conveyance on sale is to be stamped with SSD at the same time as that for the ad valorem stamp duty, i.e. within 30 days after the date on which the conveyance is executed. Before the Stamp Duty (Amendment) Bill 2012 is enacted, instruments chargeable with the new rates of SSD (the applicable rates for residential properties acquired on or after 27 October 2012) have to be stamped by reference to the old rates first (the applicable rates for residential properties acquired between 20 November 2010 and 26 October 2012). The additional SSD, representing the difference between the old rate and the new rate, has to be paid within 30 days commencing immediately after the date of gazettal of the amended ordinance.

17.

Will the SSD paid be refunded if the buyer and seller cancel the agreement for sale after SSD was paid?

In case the agreement for sale is cancelled (other than for further resale such as confirmor sale or nomination of another buyer), the person who has paid the SSD can apply for refund of the SSD within 2 years after the agreement is cancelled.

18.

If the stated consideration is considered by the Stamp Office to be below market value and further SSD may be payable, how long will it take for the Stamp Office to complete the assessment process?

In order to let the buyer and the seller know as early as possible the total amount of SSD payable, where the Stamp Office considers that the stated consideration is inadequate, the assessment to demand further SSD will be made within 40 days after the submission of the application for stamping.

19.

What are the penalties for non-payment of SSD?

Any person who fails to pay SSD by the due date shall be liable to a late stamping penalty of up to 10 times the amount of the SSD payable. If any additional SSD is not paid by the due date, the person will also be liable to penalty of up to 10 times the amount of the additional SSD payable. Any unpaid SSD and the applicable penalty are recoverable by the Stamp Office as a civil debt from all the liable parties.

20.

When does the measure which disallows deferred payment of stamp duty to residential property transactions valued at $20 million or below become effective?

The measure comes into effect on 30 June 2011. All agreements for sale and purchase of residential property signed on or after that date will not be eligible for deferment of payment of stamp duty.

21.

What is a residential property?

Residential property is defined under section 29A(1) of the Stamp Duty Ordinance as any immovable property other than "non-residential property". "Non-residential property" is defined as any immovable property which, under the existing conditions of –

(a)

a Government lease or an agreement for a Government lease;

(b)

a deed of mutual covenant within the meaning of the Building Management Ordinance (Cap.344);

(c)

an occupation permit issued under the Buildings Ordinance (Cap.123); or

(d)

any other instrument which the Collector is satisfied effectively restricts the permitted user of the property,

may not be used, at any time during the term of the Government lease in respect of the property or during the term of the Government lease that has been agreed for in respect of the property (as is appropriate), wholly or partly for residential purposes. Hence, classification of premises in terms of "residential property" or "non-residential property" is by reference to their permitted use rather than their actual use.