HK Property Tax Calculator 2026/27 (Rental Income)

How Hong Kong Property Tax Works

Property Tax in Hong Kong is charged at the 15% standard rate on the Net Assessable Value (NAV) of land or buildings located in Hong Kong and let out to produce rental income. The NAV is calculated as gross rent received during the year of assessment, minus any government rates paid by the owner, minus a statutory 20% allowance for repairs and outgoings (regardless of actual repair costs), minus any irrecoverable rent. For the 2026/27 year of assessment (1 April 2026 to 31 March 2027), gross annual rent of HK$360,000 less HK$12,000 rates produces HK$348,000. Deduct the 20% repair allowance (HK$69,600) and the Net Assessable Value becomes HK$278,400. Property tax at 15% is HK$41,760 — payable in two installments per the demand note from the Inland Revenue Department.

The 20% Repair Allowance and Why It Matters

Unlike most jurisdictions where repairs are deducted at actual cost, Hong Kong gives every property landlord a flat 20% allowance regardless of whether you spent HK$0 or HK$100,000 on repairs. If your actual repair costs are less than 20% of net rent, this is a free deduction. If your repair costs exceed 20% — say a major renovation year — you cannot claim the excess under Property Tax. In that scenario landlords often elect Personal Assessment instead (under section 41 of the Inland Revenue Ordinance) to combine rental income with salaries and other income and apply progressive rates against allowances and the actual mortgage interest deduction (capped at HK$120,000 per year for the home loan interest deduction). Mortgage interest is NOT deductible under standalone Property Tax — only under Personal Assessment.

Property Tax vs Profits Tax for Companies

If a company owns the property and rents it out, the income is subject to Profits Tax instead of Property Tax. Profits Tax is 8.25% on the first HK$2 million of profits and 16.5% above (two-tier rates), with full deductions for mortgage interest, depreciation, and actual expenses. Companies are exempt from Property Tax to avoid double taxation, but the Inland Revenue may still issue a Property Tax assessment which the company can apply to set off against Profits Tax under section 5(2)(a) of the IRO. For investment property held in a company, run both calculations — Property Tax often wins for high-rent low-mortgage properties, while Profits Tax wins for highly leveraged purchases with large interest deductions. Last updated: 2026/27 year of assessment, based on Inland Revenue Ordinance Cap. 112 sections 5-8 and the 2026/27 Hong Kong Budget. Source: ird.gov.hk.

Reading Your Result

The summary shows your gross rent, the 20% repair allowance, the Net Assessable Value, the standard 15% Property Tax, and any 2026/27 budget reduction (subject to the cap announced in the budget speech). The recommendation considers whether you should elect Personal Assessment instead — typically beneficial when actual expenses exceed 20% of net rent or when home loan interest deduction applies. Use the IRD's eTAX system to file your return and pay in two instalments (typically January and April).