Hong Kong is lowering the tax rate for first-time buyers of properties worth up to HK$9 million ($1.1 million) in a bid to help people climb the housing ladder.
(Bloomberg) — Hong Kong is lowering the tax rate for first-time buyers of properties worth up to HK$9 million ($1.1 million) in a bid to help people climb the housing ladder.
Financial Secretary Paul Chan announced the plan in his budget speech Wednesday, saying the proposal aims to ease “the burden on ordinary families of purchasing their first residential properties, particularly small and medium residential units.” The measure will benefit 37,000 buyers and cost the government about HK$1.9 billion a year, he added.
Developer shares gained on speculation that the plan will give a boost to the city’s property market, which saw prices slump 16% last year as a result of higher interest rates. Slower rate hikes and a lower tax burden could encourage more new buyers to purchase dwellings in the world’s least affordable housing market.
The current tax for such buyers differs by the values of the properties. With the new measure, which will be effective today, homes with a higher value will be taxed at a lower rate than before. For an apartment valued at HK$8 million, for example, the tax rate for first-time buyers with Hong Kong permanent residency will be cut to 3% from 3.75%.
Tax rates for properties worth more than HK$9 million will remain the same.
Shares of Sun Hung Kai Properties Ltd., Hong Kong’s biggest developer, climbed as much as 3.4% after the announcement, the most this year. Henderson Land Development Co. jumped as much as 2.7%.
(Updates with share moves in third and sixth paragraphs. An earlier version corrected the maximum home value subject to the tax cuts.)
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