Lower transaction fee in selling property

Background

  1. Mr. A is 100% shareholder of H Ltd (a Hong Kong company);
  2. H Ltd owns a Hong Kong property for long term investment and no finance required from bank.

New arrangement

  1. Mr. A needs to sell the property to Mr. B;
  2. Market value of the property is HKD 5,000,000;
  3. If H Ltd sells the property to Mr. B, stamp duty payable is around 3% of HKD 5,000,000 = HKD 150,000 (the rate as at 7/2008);
  4. If Mr. A sells share of H Ltd to Mr. B, then, Mr. B owns the property indirectly.

Benefit

  1. Share transfer stamp duty is HKD 1 per HKD 1,000 value;
  2. Therefore, stamp duty will be around HKD 5,000,000 / 1,000 = HKD 5,000;
  3. Even both buyer and seller need to pay the stamp duty, it is only around HKD 10,000;
  4. There is saving of around HKD 140,000.