Exclusive | Wily buyers work around stamp duty rule by splitting purchases under different names

Wily buyers appear to have found a workaround for the Hong Kong government’s new stamp duty rule, barely a day after the outgoing Chief Executive Leung Chun-ying announced he’s closing a five month tax loophole to help his successor to get a handle on the city’s runaway property prices.

During a Wednesday sale at Cheung Kong Property Holding’s Harbour Glory apartment project in North Point, a family bought three apartment units for a combined bill of about HK$170 million (US$21.9 million) after discounts.

Because they split their purchases into three individual names – each name not being a prior property owner – they were able to skirt the government’s 15 per cent stamp duty on multiple purchases in one go.

“It’s not illegal, but it’s creative,” said Sammy Po, chief executive of Midland Realty’s residential department. “Whenever there’s a new policy, buyers and sellers always come up with a way to minimise the impact.” Po’s realty firm brokered the purchases by two groups of customers, each buying two units of three-bedroom apartments at Harbour Glory.

One group comprises a father and his son, who each bought an apartment measuring 1,062 square feet on different floors in the same block, for a total price of more than HK$60 million, after a 34 per cent discount by the developer.

“As the two flats were bought in two separate contracts, and neither of them owned properties under their names, they are not subject to the 15 per cent stamp duty,” Po said. Each buyer is liable for a 4.25 per cent duty, equivalent to HK$1.27 million.

The city’s government announced a new policy on Tuesday, whereby buyers of multiple units of apartments on the same sales contract must pay 15 per cent stamp duty for each of the properties. Before the new rules, some affluent buyers had lumped multiple properties on the same contract to avoid paying additional duty.