Hong Kong imposes additional tax on luxury homes, with a sale price of 100 million HKD taxed at 6.5 million HKD

Article | “Finance” Researcher Wang Wentong

Editor | Yang Liyun

Recently, Hong Kong imposed an additional stamp duty on “luxury homes,” attracting public attention.

Since February 26, Hong Kong has increased the stamp duty rate for residential properties sold for over 100 million HKD from 4.25% to 6.5%.

Hong Kong Financial Secretary Paul Chan Mo-po stated that this fiscal measure, officially defined as a “pay-as-you-can” approach, is expected to affect about 0.3% of residential property transactions across the city and generate approximately 1 billion HKD in annual tax revenue.

For a luxury home valued at 100 million HKD, the previous tax at 4.25% was about 4.25 million HKD; after the adjustment, the tax rises to 6.5 million HKD, an increase of roughly 53%.

Ding Shuxian, Head of Research at JLL Hong Kong and Executive Director, believes that for mainland Chinese buyers or corporate purchasers, the adjusted tax rate remains nearly 80% lower than the peak taxation period. It is expected that the transaction volume of super-luxury new homes over 100 million HKD will continue to develop healthily this year. Compared to cities like London and Singapore, Hong Kong’s luxury homes remain competitively priced even after the tax increase.

“This policy is not aimed at suppressing the real estate market but is more of a redistribution fiscal policy, taxing the wealthy to subsidize low-income groups. Therefore, it will not alter the long-term recovery trend of Hong Kong’s luxury housing market,” according to a Morgan Stanley research report. From the perspective of luxury home buyers, the additional tax cost caused by the stamp duty increase is negligible, and a slight rise in housing prices can offset this cost.

However, Zeng Huanping, Chairman of Colliers Hong Kong, told Securities Times that the new policy will inevitably cause a sharp short-term decline in transactions of luxury homes over 100 million HKD, with a recovery expected only after six to seven months.

According to Centaline Property Agency, in the first two months before 2026, there have been 48 transactions of residential properties over 100 million HKD. In 2025, the total number of such transactions reached 262, a record high, with a total transaction value of 53.12 billion HKD.

CRIC research reports indicate that Hong Kong’s property market has moved from the “initial recovery” phase into an “expansion” phase. The policy logic has shifted from “rescue” to “profit sharing” and “risk avoidance.”

Industry insiders generally believe that this new taxation policy specifically targets buyers of luxury homes over 100 million HKD and does not reverse the “cooling” measures for ordinary housing, having a limited overall impact on Hong Kong’s property market.

“Cooling” refers to the previous measures by the Hong Kong SAR government to control the property market, including measures to curb speculation and slow rapid price increases, such as strict taxes and credit restrictions. “Reversal” means lifting these restrictive policies to return the market to a more relaxed environment.

From 2010 to 2020, Hong Kong’s property market was booming, with policies mainly focused on regulation. In November 2010, Hong Kong introduced the Additional Stamp Duty (ASD), initially set between 5% and 15%. In October 2012, the ASD was increased, extending the coverage to three years and raising the rate to a maximum of 20%. At the same time, the Buyer’s Stamp Duty (BSD) was introduced, mainly targeting non-local buyers and corporate purchasers, with a rate of 15%.

As the market continued to heat up, stamp duties were gradually increased. In November 2016, Hong Kong further “tightened” measures, raising the overall stamp duty rate to 15% of the property price, under the name “New Residential Stamp Duty.”

Since 2021, Hong Kong’s property market has entered a downward phase, with policies gradually easing.

From 2021 to 2023, policies mainly focused on “reducing cooling measures” and slight adjustments to mortgage rules. In 2024-2025, the policy shifted toward “reversal,” significantly lowering transaction costs and financing constraints.

Until February 28, 2025, Hong Kong announced a comprehensive “reversal” of cooling measures, where buyers—local, mainland Chinese, or corporate—only need to pay stamp duty up to 4.25% based on the property price, regardless of whether they purchase residential or non-residential properties.

Coupled with rising rental yields, falling mortgage rates, and continuous net inflows of residents, Hong Kong’s property market stabilized and rebounded in 2025.

According to data from the Land Registry, in 2025, the total number of property transactions in Hong Kong reached 80,702, an 18.7% increase year-on-year, the highest in nearly four years; total transaction value was HKD 614.27 billion, up 15% year-on-year.

In terms of transaction volume, Wind data shows that in 2025, the Hong Kong private residential price index increased by approximately 3.25%–3.3% year-on-year, marking the first annual rise since 2021.

Entering 2026, the market recovery has become more evident. According to Centaline Property, new home sales in January exceeded 2,400 units, a 15-month high; February’s transactions also surpassed 1,300 units, with new home sales exceeding 1,000 units for 13 consecutive months.

The rebound in residential rents in Hong Kong began earlier and is more pronounced.

Guoxin Securities reports that since late 2022, Hong Kong’s private residential rent index has continued to rise, with a 2025 full-year increase of 4.3% year-on-year, surpassing the 2019 record high.

The market recovery in Hong Kong will also positively influence the overall Greater Bay Area real estate market.

Yan Yuejin, Deputy Director of E-House Research Institute in Shanghai, said that with the acceleration of the Shenzhen-Hong Kong integration, the increase in cross-city residents will generate demand for cross-city property purchases, effectively boosting confidence in the entire Greater Bay Area market.

For example, Shenzhen’s property market, while unlikely to replicate Hong Kong’s rapid surge, has seen a clear increase in property viewings, indicating that demand from first-time buyers is steadily entering the market. Areas with core locations and industrial support are expected to stabilize and recover first.