Tax deductions for home loan interest proposed to extend to 20 years

First time buyers' stamp duty is also proposed to be HK$100.

According to Grace Tang, Tax and Business Advisory Services Partner at Ernst & Young, in addition to the various measures announced by the new government since July 2012 to make homes more affordable, we propose that the stamp duty payable by first time buyers of properties valued at not more than HK$3,000,000 be charged on a fixed amount of HK$100.

Furthermore, Tang also proposes to extend tax deductions for home loan interest from 15 to 20 years. We estimate that these two proposed measures would cost the government around HK$1 billion a year in tax revenue forgone.”

“To ease the tax burden on individuals, we also propose widening the tax band from HK$40,000 to HK$48,000. This proposed measure will be at an estimated revenue cost of HK$2 billion a year. In addition, we further propose a number of other recurring tax relief measures including: (i) introducing tax deductions for medical insurance premiums of up to HK$20,000 a year; (ii) allowing tax deductions for voluntary contributions to recognized retirement schemes of up to HK$15,000 a year; and (iii) granting tax deductions for child education expenses of up to HK$60,000 a year.” Grace adds.

As a one-off measure to relieve the tax burden of individuals, Ernst & Young further proposes waiving rates for 2013-14, subject to a ceiling of HK$2,500 per quarter for each rateable unit.