property by 31 July 2020, and could not be located. Mr Choi deductedthe rental deposit to compensate for the unpaid rental. Since then, theproperty has been left vacant.Mr Choi incurred $25,000 per month as mortgage interest. He also paid$15,000 as a property agency fee for sourcing the tenant.Required:Determine the property tax payable for Mr Choi for the years ofassessment 2019/20 and 2020/21. Ignore provisional property taxand any tax or rates waiver or reduction in your calculations.b Briefly explain the deductibility of bad debt for Mr Choi for thepurpose of property tax computation.Mr Choi would like to re-let the property. Suggest a way in whichMr Choi could reduce the amount of property tax payable bychanging certain term(s) of the lease.d What would your answer to part (a) be if the tenant had stoppedpaying any rent from 1 December 2019 onwards instead of 1 March2020? Mr Choi was born and raised in Hong Kong. In recent years, due tofamily-related reasons, he spends most of his time in Shenzhen. ThoughMr Choi has a Hong Kong Identity Card, he seldom visits Hong Kongas most of his friends and relatives are in mainland China. In July 2019,Mr Choi purchased a residential property in Tai Po for $30,000,000 forinvestment purpose. After a quick renovation, the property was let to MrChan for two years, starting from 1 September 2019. The relevant termsof tenancy agreement are extracted below:monthly rent: $30,000, payable at the beginning of each month;rent-free period of a half-month from 1 September 2019;initial premium of $48,000, payable on signing the lease agreement;rates of $6,000 per quarter, payable by Mr Choi to the government;management fees: $2,000 per month, payable by the landlord; andrental deposit: $60,000 payable on signing the lease agreement.In October 2019, the property underwent certain repairs that cost$5,000; these repair costs were paid by the tenant. The tenant did notdeduct the repair costs from the rental payment.The tenant had financial difficulties and stopped paying any rent from1 March 2020 onwards. Subsequently the tenant had moved out of the

Income tax: The income tax refers to the amount that is paid by the taxpayer to the tax authority of…

a Determine the property tax payable for Mr Choi for the years of assessment 2019/20 and 2020/21. Ignore provisional property tax and any tax or rates waiver or reduction in your calculations. b Briefly explain the deductibility of bad debt for Mr Choi for the purpose of property tax computation. Mr Choi would like to re-let the property. Suggest a way in which Mr Choi could reduce the amount of property tax payable by changing certain term(s) of the lease. d What would your answer to part (a) be if the tenant had stopped paying any rent from 1 December 2019 onwards instead of 1 March 2020?

a Determine the property tax payable for Mr Choi for the years of assessment 2019/20 and 2020/21. Ignore provisional property tax and any tax or rates waiver or reduction in your calculations. b Briefly explain the deductibility of bad debt for Mr Choi for the purpose of property tax computation. Mr Choi would like to re-let the property. Suggest a way in which Mr Choi could reduce the amount of property tax payable by changing certain term(s) of the lease. d What would your answer to part (a) be if the tenant had stopped paying any rent from 1 December 2019 onwards instead of 1 March 2020?

CONCEPTS IN FED.TAX.,2020-W/ACCESS

20th Edition

ISBN:9780357110362

Author:Murphy

Publisher:Murphy

Chapter12: Nonrecognition Transactions

Section: Chapter Questions

Problem 42IIP

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