Juliet Risdon
1. THE LAW ON SECURITY DEPOSITS
The usual security deposit (or ‘bond’ as it is sometimes called) in Macau is an amount equivalent to 2 months rent.
The law states that the security deposit is negotiable between the Landlord and the Tenant. As such, the amount of the deposit may vary according to the contents and value of the property.
If you rent an apartment unfurnished, it is more likely that you will be able to negotiate a different deposit than if the apartment is full of expensive furnishings and appliances.
2. TAX ON RENTAL INCOME
Landlords are duty bound to pay tax on the rental income they receive from a property.
Originally, this tax was 16% of the rental income, but the government reduced the amount to 10% in order to encourage owners to register tenancy agreements.
There are thresholds and allowable deductions for maintenance and upkeep that reduce the overall effect of the tax.
If tax remains unpaid, the government will accrue the back tax, and add a daily interest rate. Non-payment can be expensive!
3. PROPERTY INSURANCE
In general, owners pay ‘building’ insurance, which is the amount of money that it will cost to re-
build the property in case of some major event.
However, it is up to tenants to insure the contents of a property as they are the ‘guardian’ of those contents during the term of the tenancy.
Insurance can be arranged through most local banks, and tenants living in older buildings are well advised to protect themselves in case of loss.
Generally, Macau is one of the safest on earth places to live, and content loss is more likely to come from burst pipes, electrical fires and typhoon damage than anything else.
4. DIFFERENT LEVELS OF STAMP DUTY
Stamp Duty in Macau has been revised in the past few years, and varies according to the price of the property.
For the first MOP 2,000,000 the stamp duty is 1%.
For the next MOP 2,000,000 the stamp duty is 2%
For everything over MOP4,000,000 the stamp duty is 3%
Hence if you buy an apartment for MOP 3,000,000 the stamp duty is Mop 40,000 (MOP 2,000,000 x 1% plus MOP 1,000,000 x 2% = MOP 40,000).
If you buy an apartment for MOP 5,000,000 the stamp duty is Mop 90,000 (MOP 2,000,000 x 1% plus MOP 2,000,000 x 2% plus MOP 1,000,000 x 3% = MOP 90,000).
Non-permanent residents must also pay an additional stamp duty of 10% of the purchase price on top of the duty above.
5. WHY BANK VALUATIONS VARY DRAMATICALLY FROM BANK TO BANK
The value that a bank puts on the property is not just about the property itself, but also reflects how the bank feels at that time about the property market and financial markets as a whole.
Prices are based on the size of the property, recent transaction prices and the location only. They do not reflect the level of the interior or fit out.
You can request and pay for a full property valuation from professional valuation companies, who will come and visit your property.
They will account for the quality of the interior and any potential the property might have to expand.
Juliet Risdon is a Director of JML Property and a property investor.
Having been established in 1994, JML Property offers investment property & homes. It specializes in managing properties for owners and investors, and providing attractive and comfortable homes for tenants.
www.JMLProperty.com
info@JMLProperty.com
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