EAQE Conveyancing, mortgages and property tax question: flat for HK$300,000 a year and pays rates of HK$10,000 himself

EAA EAQEConveyancing, mortgages and property tax

Mr Chan, an individual, lets a flat for HK$300,000 a year and pays rates of HK$10,000 himself. What property tax is payable for 2025/26 at the standard rate?

A HK$34,800
B HK$45,000
C HK$36,000
D HK$43,500

Show the answer and explanation

Answer: A. HK$34,800

Answer: HK$34,800. Working: 1. Assessable value after rates paid by owner = HK$300,000 − HK$10,000 = HK$290,000. 2. Less 20% statutory allowance = HK$290,000 × 80% = HK$232,000 (net assessable value). 3. Tax at 15% = HK$34,800. Why not the others: - HK$45,000: 15% of gross rent, ignoring deductions. - HK$36,000: Applies the allowance but forgets to deduct rates. - HK$43,500: Deducts rates but forgets the 20% allowance. Rule: Property tax is charged at the standard rate (15% for 2025/26) on net assessable value: rent less irrecoverable rent, less rates paid by the owner, less a 20% statutory allowance for repairs and outgoings. Source: Inland Revenue Ordinance (Cap. 112), Part II; IRD property tax guidance; as at Oct 2026

Common mistake

Forgetting the order: deduct rates first, then the 20% allowance.

Practise more EAQE Conveyancing, mortgages and property tax questions

Exam-style questions with worked answers, then full timed mocks. Free to start.

Start practising →

Study note: Conveyancing, mortgages and property tax EAQE practice questions and mock exams

Related EAQE questions

Mr Ho's mortgage on his flat is an 'all moneys' legal charge. He also owes the same bank HK$800,000 on a business overdraft. He sells the flat. What does the bank require before it releases the charge?Mrs Ip gives her flat, worth HK$6,000,000, to her adult son by a deed of gift in Oct 2026. Which statement about stamp duty is correct?Ms Lui buys a flat for HK$8,000,000 under an agreement signed in Oct 2026. Using the residential ad valorem stamp duty rates in force for instruments executed on or after 26 Feb 2026, what is the duty?

Build a daily practice habit : a few exam-style questions a day, with worked answers. Free to start.

Start practising →

An original question written to the published EAQE syllabus. Figures in the explanation carry their effective dates; check them against the current law before relying on them. Independent exam practice. Not affiliated with or endorsed by the Estate Agents Authority (EAA) or the examination administrator.