Question 1 (30 marks) s Fong purchased a property in Yuen Long many years ago. T

Question

Question 1 (30 marks) s Fong purchased a property in Yuen Long many years ago. The property was let to Mr Au for three years starting from 1 January 2015 The relevant terms of the tenancy agreement are extracted below: Monthly rent: $22,000 payable at the beginning of each month Rates and government rent: payable by the landlord Management fees: S1,000 per month payable by the tenant to the management company mantig Rental deposit: S44,000 In July 2015, the property underwent certain repairs and it was agreed that both the tenant and the landlord would share the repair expense equally. The repair works cost $28,000 Due to financial difficulties, Mr Au was unable to pay the rent starting from 1 February 2016. On 15 April 2016, it was agreed that Ms Fong would use the rental deposit to offset part of the outstanding rent and Mr Au would settle all rent outstanding and pay the monthly rent on time afterwards. For the months of April 2016 to June 2016, the rents was paid on time Starting from 1 July 2016, Mr Au stopped paying rent again. He eventually moved out of the property on 3l October 2016 and was then untraceable. The assessor agreed that the outstanding rent was irrecoverable Subsequently, the property was let to Mrs Cheung on 1 November 2016 under the following terms

Explanation / Answer

$ $ a. Property tax payable by Ms Fong 2015/16 2016/17 Rent receipts (22000*11 months), (22000*3+26000*5) 242000 196000 Rent outstanding received of previous year 0 22000 Less: Repair costs (half) 14000 0 Rates 12000 14400 Government rent 7200 8640 Mortgage loan interest 52000 55000 Add: Recovery 18000 52000 Total property taxable amount 174800 191960 b. Obligations of property owners i Tax returns disclosing all the relevant propeerty details should be submitted within due date. ii The property owner should notify the revenue department abut his or her eligibility to pay properrty tax. iii Where any sale of the property is done, the owner should notify the department about his cessation of the ownership. iv Any chamge in address should also be communicated to the departmet. v Rental records should be properly maintained such as rent/lease agreemenets, rent receipts and other sufficient records ascertaining the tax laibility of property. vi If any exemption gets applicable and the owner cliams for such exemption, the same should be notified to the department. vii If the property is jointly owned then every owner needs to comply with the ordiance. viii if any part of the building is let out then any renatl income received on such let out should be paid. c. There would be no differnece if Mr Au pay management fee to Ms Fong instead to the management company.

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