Written by: Frederik Balfour
Approaches include the use of shell companies and first-time home ownership
“Most tycoons are trying to circumvent these policiesâ€
Edwin Leong, one of Hong Kong's largest retail real estate developers, and his family bypassed Hong Kong's new price restraint measures, saving nearly $17 million in taxes. How did they do it?
Hong Kong retail real estate developer Liang Shaohong
They managed to obtain the first-time home purchase qualification, and in one day in November, they spent 1.2 billion Hong Kong dollars (about 155 million US dollars) to buy three high-end apartments on the Victoria Peak. Previously, Liang Shaohong had no real estate under his name, but he had more than 300 sets of other properties, including apartments, hotels, shopping malls, etc. through his company Tai Hung Fai Enterprises Co., with a net worth of about $4 billion. .
Hong Kong is the most difficult city in the world. The local government departments are also struggling with the widening gap between the rich and the poor, while the wealthy buyers can bypass those policy restrictions through some legal channels. Since the Chief Executive, Leung Chun-ying, announced the latest round of regulation and control policies on November 4, Hong Kong's housing prices have risen to the highest level in history, and sales have continued to soar. This situation highlights the difficulty of taming the market.
Alan Wong, head of the Hong Kong market at Landscope Christie's International Real Estate, said
“Since Liang Zhenying’s new policy has been introduced, most tycoons are trying to circumvent these policies.â€
According to Henry Mok, regional marketing director at Jones Lang LaSalle Inc., about 70% of new apartments have been covered by low-tax first-time buyers since the new tax was introduced in October. Previously, this ratio was only about 30%. The government has not released data on the purchase of multiple homes.
Liang Zhenying recently announced that he will not fight for re-election. He has been working hard to calm the public's dissatisfaction with high housing prices. Although the government has tried to increase supply by releasing more land, house prices continue to climb with the influx of mainland developers seeking a foothold in Hong Kong.
According to Centaline Property Agency Ltd., since the beginning of November, house prices in the secondary market have risen by 0.8%, which is only 1.4% away from the highest in 2015. Adrian Cheng, executive vice president of New World Development Co., said that after the implementation of the new tax, the proportion of first-time buyers is higher.
Since 2012, the housing price index has risen nearly 50%
In addition to avoiding taxes through first-time home purchases, the wealthy's approach also includes buying a shell company that owns the property. This practice is considered a share transfer and requires only a 0.2% stamp duty. If the company's place of registration is overseas, the stamp duty is zero.
According to the Hong Kong Stock Exchange, on November 28, a single-family house with a yard and a swimming pool in Kowloon was traded on this strategy, which was valued at HK$410 million. If it is sold as a home rather than a company registered in the British Virgin Islands, a 45% tax rate will be applied, including a transfer tax, as it was already sold earlier in 2016 – All taxes will add up to more than HK$180 million. And in the current way, the tax is 0.
Mainland demand
According to government data, in 2011, more than half of Hong Kong's housing of more than 20 million Hong Kong dollars was sold through the company. In 2013, after the government began to impose higher taxes on individuals than companies that bought houses, this practice basically disappeared, but there are still thousands of homes in this way, and it can still save a lot when reselling. Pen tax.
Alan Wang of Christie's International Real Estate said that he has received many overseas requests to buy such companies, most of which are from Chinese rich. If they don't adopt this method, they will face 15% of new taxes and non-permanent residents. 15% extra tax. In fact, the real estate agent also advocated this approach on its website.
“Get rid of the rising stamp duty,†wrote the page. “I was scared by 15% stamp duty? Don’t worry! Our gold sales sell a lot of properties that can be sold through share transfer (of course, you need a lawyer to handle the entire process).â€
Due diligence
However, Alan Wang said that because due diligence on such companies is expensive and complex, only about 5% of luxury homes are purchased in this way.
According to Jones Lang LaSalle, Liang Shaohong’s apartment in Nie Gaoxinshan was located on a mountain enclave with four marble bathrooms, walk-in closets for men and women, and a private elevator hall. The deal broke. The highest record for housing per square foot in Asia. Liang Shaohong saved 10.75% of the tax through the stamp duty concession for the first purchase. Liang’s company revealed that he liked the “excellent†section but declined to comment on the tax savings.
Residential property of Nie Gaoxinshan Project
Two of the new apartments are adjacent units on the 17th floor and can be opened to more than 8,700 square feet of living space, which is more than 10 times the average size of Hong Kong apartments. It will become the main residence of Liang Shaohong. . The third apartment is 4,566 square feet (about 424 square meters) and is located on the 7th floor.
Obvious vulnerability
In order to make it easier for low-income families to climb the property ladder and increase the cost of real estate speculators and overseas buyers, the Hong Kong government has launched a series of measures since 2011, and the new tax in October is the latest one. These include punitive taxes on resale within 3 years of purchase and an additional 15% stamp duty on non-permanent residents.
The new 15% stamp duty replaces the previous 3% tax rate from less than $3 million in homes to a maximum of 8.5% above HK$21.7 million. The tax rate for first-time homebuyers can be halved, including buyers who have had houses in the past and no houses now.
“This is an obvious loophole,†said Raymond Yeung, chief economist at Australia & New Zealand Banking Group Ltd. in Hong Kong. “The government did not consider this before issuing the policy.â€
Singapore has successfully suppressed home prices since the launch of the restraint policy in 2009. The country also imposes a 15% tax on foreigners and businesses, and first-time homebuyers can also enjoy lower stamp duty. But unlike Hong Kong, Singapore does not allow first-time homebuyers to buy multiple homes at low rates.
"misleading policy"
“The government is trying to cool the market, but there is no indication that the previous policy has worked,†said David Webb. He is a shareholder advocate in Hong Kong and bought his own home 10 years ago through a company registered in Seychelles.
“They launched a large number of misguided policies that failed to achieve the desired results.â€
A spokesman for the Hong Kong Transport and Housing Bureau said that the policy has begun to play a role.
“We still need some time to better assess the impact of the new stamp duty measures on the market,†spokesman Leo Law said in an email. “However, market research has shown that after the government announced the latest round of measures, the real estate market has shown signs of cooling. Trading activity has stabilized and housing prices have slowed.â€
Despite this, Denis Ma, head of Jones Lang LaSalle's Hong Kong research department, said no one has mentioned that it is even harder to bypass taxation policies.
"These are loopholes that have not been blocked, and I don't think they can be blocked," he said.
"Hong Kong is a very free market and the level of government intervention is not so high. This is where Hong Kong is proud."
Editor: Liu Xinwei
Translation: Cheng Wei
Reply to the keywords you are interested in
Get more information about TA now!
Sending a book welfare, Trump's world view, physical bookstore, Wal-Mart crime
Fans make stars, Xu Xiaonian, Hello World, red phone booth, and murder
Russian ambassador to Turkey was assassinated
Where is the relationship between Russia and Turkey?
Long press to identify the QR code and download it at a speed!
kaiyue , https://www.marketuniongroups.com