Pedestrians walk along a footbridge in Hong Kong’s Wanchai area on Jan 17, 2022. (BERTHA WANG / AFP)
HONG KONG - The Taxation Institute of Hong Kong has suggested the special administrative region government deduct taxes for the city’s first-time home buyers in the upcoming 2022-23 Budget, as house prices continue to soar.
Ng Kam-wah, president of the institute, said at a press conference on Thursday that the proposal aims to help residents purchase their first residential property while reducing restrictions impacts from relevant stamp duties.
Hong Kong residents, especially the young generation, are still experiencing difficulties in purchasing their first home despite the implementation of anti-speculation stamp duty measures and the raised mortgage threshold, the institute said. Ceilings on the value of properties eligible for 80 percent and 90 percent mortgage coverage rose to HK$10 million and HK$8 million respectively for first-time home buyers in 2019.
The Taxation Institute also suggests that rental expenses paid for a principal residence be deductible under salaries tax and personal assessment, and the amount deductible be limited to HK$100,000 for each year of assessment
Hong Kong’s home prices have been increasing for 13 consecutive years up to 2021, even during the pandemic. The latest home sale index released by the Rating and Valuation Department showed that the index of house prices increased by 3.3 percent year-on-year in December 2021, as the fifth wave of COVID-19 outbreaks started.
The tax group proposes the government waive the ad valorem stamp duty on the transfer of residential property for permanent residents aged 18 or above, whose first home purchase does not exceed HK$8 million. The buyer must live in the house purchased for a continuous period of 3 years, the institute said.
The institute also suggests that rental expenses paid for a principal residence be deductible under salaries tax and personal assessment, and the amount deductible be limited to HK$100,000 for each year of assessment.
Ng said the government should allocate limited resources to individuals and businesses hard hit by the prolonged pandemic, and take a one-off special relief measure of issuing a further round of electronic consumption vouchers of HK$3,000 to residents.
The elderly should also be treated as high priority in the upcoming budget, according to the institute. Hong Kong’s silver population, or those aged 60 or older, is at severe risk — given their low vaccination rate — as omicron continues to spread.
“We propose expanding the coverage of the Elderly Health Care Voucher Scheme by lowering the age threshold from 65 to 60 years old and allowing usage of the vouchers for preventive medical services rather than just for primary healthcare services,” the Taxation Institute said in its budget proposals.
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