7. Will the letting of common areas of a building cause liability to Property Tax?
Normally the common areas of a building such as a side shop, carpark, external wall, rooftop, etc. are collectively owned by the individual owners of the building. If any part of the common areas is let out, the rental income derived is chargeable to Property Tax. The owners are responsible for reporting the rental income and paying the tax. If the owners have not received the Property Tax Return relating to the common areas let, they are required to notify the Commissioner in writing.
However, when an owners' corporation is formed, section 16 of the Building Management Ordinance (Cap. 344 of the Laws of Hong Kong) provides that the rights and duties of the owners relating to the common parts of the building shall be exercised and performed by the incorporated owner/owners' corporation of the building . Therefore, the incorporated owner is required, on behalf of all the owners of the building, to report the income (via Property Tax Return B.I.R.58) and pay the tax.