Income Tax on Housing

Hi Mr B & Mr Tall,

Sorry need to trouble you again, the company HR told us that as long the annual rental amount is not exceeding 40% of the annual salary, we can deduct the actual rental amount from the total annual taxable income under tax effective scheme.

for e.g. Annual package HKD480,000 

Monthly Housing HKD10,000, annual house rent = HKD120,000

Total taxable income = HKD (480,000 - 120,000)

                                 = HKD 360,000

Is this correct?

Best regards,

Probably Hong Kong



Rental deduction

Hi Probably;

I'm not sure it's quite that simple. This is the page from the Hong Kong Inland Revenue website that you should check out. Just plain rent is not deductable, so far as I understand. What comes into play is money paid to you that your company can stipulate as being a housing allowance and not straight-up income.

Any renters out there who can give more specific advice?

Mr Tall

rental deductions

Hi Probably,

You're both correct, roughly. I rent, and have had one of these claims already (successfully, so far!).

You only pay tax on (gross income) - (rent paid) provided your company has your rent registered in accordance with their procedures; and they agree with you when you tell the IR that your pay is not actually 480k, but is 360k and they also pay your rent (of 120k) for you.

I have no idea why it's so convoluted, but I'm not going to complain given that it's quite a tasty tax break.