SALE AND PURCHASE

Costs relating to sale and purchase of real estate


Tax

Under the Stamp Duty Ordinance (Cap.117) (SDO) the seller and/or the buyer may be liable for the payment of AVD, BSD and SSD for the acquisition and disposition of residential property. Payments of AVD, BSD and SSD are not mutually exclusive. If stamp duty is paid on the agreement for sale and purchase, HK$100 stamp duty is payable on the assignment. On behalf of the Property Management Services Authority, the Stamp Office also collects a levy of HK$350 payable by a purchaser on the assignment upon completion under Property Management Services Ordinance (Cap. 626).

If a purchaser acquires a property (whether it is non-residential or residential property) via a share transfer of a limited company, then the current stamp duty payable on each bought and sold note will be 0.13% (totaling 0.26%) of the higher of the purchase price or the net asset

Payments of AVD, BSD and SSD are not mutually exclusive.

value of the shares as evidenced by the audited financial statement of the company. HK$5 is also payable on the instrument of transfer.

Key Exemptions: Intragroup transfers between associated companies (defined as one having 90% or more direct or indirect beneficial ownership of issued share capital of another, or companies under common ownership by a third holding company of 90% or more of the respective issued share capital of each) of Hong Kong shares and Hong Kong properties may be exempt from stamp duty.

For specific tax rates, please refer to Section on Taxes.

Broker / estate agent's fees

The broker / estate agent arranges for listing and viewing of property. He/she also helps the seller and buyer to negotiate key terms of the sale and purchase agreement. The broker / estate agent provides a standard provisional agreement (which may be reviewed and comments by a lawyer) to be signed by the parties to record such key terms. He/she also assists the buyers in matters like passing of keys, and

arranging for inspection of the property if vacant possession must be delivered on completion. Broker / estate agents' fees are usually charged at a usual rate of 1% of the purchase price but this is open to negotiation. Typically, the fees are payable by both the seller and the buyer.

Legal fees

Lawyers are appointed to negotiate, prepare and execute the documents necessary for the conveyance of property (e.g. provisional and/or formal sale and purchase agreement, assignment, and for share transfer, contract notes, instrument of transfer and the necessary board of directors' resolutions).

The buyer's lawyer will conduct a title review and investigation of the property and raise requisitions to the title of the property. The seller's lawyer will answer title requisitions raised by the buyer's lawyer (if any) and arrange to remedy any title defect(s).

For share transfer, the legal, corporate and financial due diligence will be carried out by the buyer's lawyers (who may be assisted by the buyer's financial/tax advisors in reviewing the financial and tax documents), and the seller's lawyers will answer any requisitions raised by the buyer's lawyers relating arising out of the due diligence exercise.

The seller's lawyers are also typically involved in discharging the existing mortgage (if any) for the seller, while the buyer's lawyers will help the buyer in the mortgage and other legal documentation for the financing of the purchase.

The buyer's lawyers will typically arrange stamping and registration of the relevant instruments.

There is no fixed scale of legal fees, and the parties will negotiate the applicable fees with their respective lawyers.

In a share transfer, the legal due diligence will be carried out by the lawyers.

Other fees

Stamp duty is applicable (For specific tax rates, please click here).

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LEGAL AND REGULATORY