Housing is taxed. The owner gets taxed at a salary rate and the renter gets taxed at a reduced rate.

You can take a reduced housing with no questions asked. You do not need to show a lease or mortgage, and it is about half the normal allowance.

Cheers

FG

MAX

If you take the reduced housing as cash and not declare a lease you will be taxed at the highest rate. Depending on how much the lease is you may be better off signing a lease for the minimum amount of your allowance and registering it with the company to take advantage of the much lower tax. Just a thought.

The tax on housing is a little complicated, but I will try to keep the explanation simple.

Buyer,
cx will refund you (up to the current limit -48K?) your full mortgage payment. If you get a smaller loan, you pay it off over a shorter term to ensure it reaches that $48K monthly figure. Unfortunately, receiving that money is now declared as a cash allowance (used to be rental assistance) and so you are taxed on the full amount - 16% of 48K is about $8K extra in tax a month.

Renter,
if you dont declare a lease, or lease is less than basic rate of $24K, you will pay tax on full $24K - so about $4K. If you declare lease AND lease is for at least $24K, you pay no tax on the actual amount received (between $24K-$48K). However, as the HK IRD would like to tax you for receiving a rental allowance, it pseudo increases your income by 10% and taxes you on the increased amount. So if you had earnt say $800K as an FO in basic annual salary, it will tax you at 16% on $880K, even though you have received say $576K in rental assistance and paid $576K to landlord.

Renter after 8years in the company or those whose rents are more than allowance,
If the rental assistance you get does not cover the full rental, you may deduct the extra bit you pay from the 10% factor. So if you had been paid $800K as an FO, paid rent of say $600K and received $576K ($48K x 12) in rental assistance, you will be taxed on $800K +$80K(10%) - $24K ($600-$576) = $856K taxable amount. If your rental contribution is more than the 10%, you can only reduce your taxable income by the 10%.

The above in principal applies to first 2 years as an SO, but different numbers.

I am not sure if you add the 10% factor to salary and cash allowance in the case of purchasing as I have never been in that situation - so not sure.

clear as mud?