Mr. Zheng purchased a residential flat in Hong Kong with a mortgage loan obtained from a local bank. The property was let to TJ Ltd. under the following terms: (1) Period of lease: (2) Rent free period: (3) Monthly rent: (4) Premium: (5) Rates & government rent: 1 April 2020 to 31 March 2022 (24 months) 1 April 2020 to 30 April 2020 (1 month) $22,000 $100,000 payable on 1 April 2020 Payable by the landlord Despite taking legal actions against a former tenant, the former tenant did not settle the outstanding rent of $75,000, being rent owed for the period from 1 November 2019 to 31 January 2020. The tenant was declared bankrupt on 30 April 2020. The assessor accepted that the outstanding tax was irrecoverable when the tenant declared bankrupt. I On 1 June 2020, Mr. Zheng received outstanding rent of $30,000 from another former tenant. The total amount owed by this tenant was $60,000 and this amount was allowed as irrecoverable rent in the year of assessment 2015/16. During the year ended 31 March 2021, Mr. Zheng paid the following: (1) Rates of $6,000 (after rates concession) (2) Government rent: $7,200 (3) Mortgage loan interest: $190,000 (4) Commission to property agent for the new tenancy: $11,000 Required: Compute Mr. Zheng's property tax liability for the year of assessment 2020/21. Ignore provisional property tax. (Show all your workings)
Mr. Zheng purchased a residential flat in Hong Kong with a mortgage loan obtained from a local bank. The property was let to TJ Ltd. under the following terms: (1) Period of lease: (2) Rent free period: (3) Monthly rent: (4) Premium: (5) Rates & government rent: 1 April 2020 to 31 March 2022 (24 months) 1 April 2020 to 30 April 2020 (1 month) $22,000 $100,000 payable on 1 April 2020 Payable by the landlord Despite taking legal actions against a former tenant, the former tenant did not settle the outstanding rent of $75,000, being rent owed for the period from 1 November 2019 to 31 January 2020. The tenant was declared bankrupt on 30 April 2020. The assessor accepted that the outstanding tax was irrecoverable when the tenant declared bankrupt. I On 1 June 2020, Mr. Zheng received outstanding rent of $30,000 from another former tenant. The total amount owed by this tenant was $60,000 and this amount was allowed as irrecoverable rent in the year of assessment 2015/16. During the year ended 31 March 2021, Mr. Zheng paid the following: (1) Rates of $6,000 (after rates concession) (2) Government rent: $7,200 (3) Mortgage loan interest: $190,000 (4) Commission to property agent for the new tenancy: $11,000 Required: Compute Mr. Zheng's property tax liability for the year of assessment 2020/21. Ignore provisional property tax. (Show all your workings)
Chapter9: Acquisitions Of Property
Section: Chapter Questions
Problem 35P
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Transcribed Image Text:Mr. Zheng purchased a residential flat in Hong Kong with a mortgage loan obtained from
a local bank. The property was let to TJ Ltd. under the following terms:
(1) Period of lease:
(2) Rent free period:
(3) Monthly rent:
(4) Premium:
(5) Rates & government rent:
1 April 2020 to 31 March 2022 (24 months)
1 April 2020 to 30 April 2020 (1 month)
$22,000
$100,000 payable on 1 April 2020
Payable by the landlord
Despite taking legal actions against a former tenant, the former tenant did not settle the
outstanding rent of $75,000, being rent owed for the period from 1 November 2019 to 31
January 2020. The tenant was declared bankrupt on 30 April 2020. The assessor accepted
that the outstanding tax was irrecoverable when the tenant declared bankrupt.
On 1 June 2020, Mr. Zheng received outstanding rent of $30,000 from another former
tenant. The total amount owed by this tenant was $60,000 and this amount was allowed
as irrecoverable rent in the year of assessment 2015/16.
During the year ended 31 March 2021, Mr. Zheng paid the following:
(1) Rates of $6,000 (after rates concession)
(2) Government rent: $7,200
(3) Mortgage loan interest: $190,000
(4) Commission to property agent for the new tenancy: $11,000
Required:
Compute Mr. Zheng's property tax liability for the year of assessment 2020/21. Ignore
provisional property tax. (Show all your workings)
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