Property News · December 14, 2016

Find out how these billionaires dodged Hong Kong’s new property curbs


Twist: Asia’s most expensive apartments had a royal bargain in taxes
Victoria Harbour, Hong Kong at night. leungchopan/Shutterstock
While Hong Kong’s new property curbs have had its intended effects, they still seem to have big enough loopholes to drive mansions into.
Ultra-high-net-worth individuals in Hong Kong have found technicalities to game the property curbs announced early last month on the watch of Hong Kong Chief Executive Leung Chun-ying.
“Since the policies of CY Leung were introduced, most of the tycoons have been finding ways around them,” Alan Wong, director of the Hong Kong market at Landscope Christie’s International Real Estate, told Bloomberg.
The curbs include an additional stamp duty of 15 percent for non-permanent residents and penalties for buyers who put their homes back on the market within three years.
The curbs tax first-time property purchasers at much lower rates however. “This is clearly a loophole,” said Raymond Yeung, chief economist at Australia & New Zealand Banking Group Ltd in Hong Kong. “The government hadn’t thought about this before they launched the measure.”
More: Stamp duty blues: Hong Kong buyer slapped with USD12 million tax bill
Three homes at The Peak sold for a record HKD1.2 billion (USD155 million) as Asia’s costliest apartments to date. The mystery buyer has been revealed to be Edwin Leong, one of China’s biggest retail moguls, who somehow managed to qualify as a first-time home buyer and consequently saved 10.75 percent or USD17 million in taxes.
First-time buyers comprised around 70 percent of apartment sales since the curbs had been announced on Nov. 4, Bloomberg reported, citing data from Jones Lang LaSalle.
Apart from posing as a first-time purchaser, residents can skirt the taxes by buying a shell company that owns a property, a transaction that qualifies as a share transfer. The purchase of a detached Kowloon home worth HKD410 million late last month ended up with zero taxes because it was sold through a company registered in the British Virgin Islands.
“The government is trying to cool the market, but there is no evidence that previous measures have done that,” Hong Kong-based shareholder activist David Webb told Bloomberg. “There has been a whole series of misguided measures that have not had their intended effect.”
Read next: Hong Kong real estate prices to soften next year

Source : property-report.com
Read more…Find out how these billionaires dodged Hong Kong’s new property curbs

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