Real Estate Matters | 25 Property Questions We Were Asked This Year – Part 2 of 5

Juliet Risdon

20. What is ‘Stamp Duty’ in Macau?
Stamp duty is the government tax levied on buyers of properties, and is usually paid by the buyer, not the seller.
The amount of stamp duty is calculated incrementally on three different levels.
• Up to $2m, it is 1%
• From $2m to $4m it is 2%
• Above $4m it is 3%
A property acquired for $4.5m would incur a stamp duty of $75,000 ($2m x 1% = $20,000) + ($2,000,000 x 2% = $40,000) + ($500,000 x 3% = $15,000)
A property acquired for $5m would incur a stamp duty of $90,000 ($2m x 1% = $20,000) + ($2m x 2% = $40,000) + ($1m x 3% = $30,000).
A government initiative to try to curb property speculation was introduced in April 2011. Properties sold within 1 year of the original purchase will pay an additional stamp duty of 20%, and properties sold within 2 years will pay an additional 10%.
Furthermore, there is also an additional ‘Stamp Duty’ for non Macau ID holders of 10% of the purchase price, payable upon purchase, to try and slow down the flood of foreign investment in Macau property and keep prices affordable for the local population.
It is also worth remembering that Macau Properties are priced in HKD, but the stamp duty is calculated in Patacas. Hence, stamp duty on a property that sells for HKD4m will be calculated on MOP4,120,000

19. Do I need insurance if I am renting an apartment?
Yes, to protect yourself against the loss of the contents of the property.
The owner is responsible to acquire insurance for the construction of the apartment, whilst as a tenant you are responsible for the welfare and safekeeping of the contents and furnishings.
We recommend that you have content insurance, it can be obtained from banks in Macau, and we also have contacts for insurance companies that we are happy to share if you are having trouble getting insurance.
The amount you pay depends on the sum insured.

18. How much cash do I need to buy an apartment?
There are a few factors here, such as whether you are a Macau resident / non-resident, plus of course salary levels and your track record with the bank.
In a nutshell, the more you can borrow from the bank, the better. Generally the banks now lend up to 70% of the property price to Macau ID holders, and 50% of the price to non-residents.
If you are buying a property for $3m, as a Macau resident you will have to find 30% of the cash or $900,000 for the deposit, plus an additional 5% or $150,000 to cover fees.
As a non-resident, you will have to find 50% of the price or $1.5m for the deposit, and again approx. 5% or $150,000 for the fees.

17. What’s the best time to find a rental apartment?
The turnover of apartments in Macau is extremely fast. As supply is low and demand is high, there is a constant battle to find and confirm a suitable apartment in which to live before someone else takes it.
Whilst planning ahead is important, the best time to find an apartment is a maximum of 4 weeks ahead of your scheduled move date, although 2 weeks ahead is a more usual scenario.
Owners will generally refuse to hold a property for more than 4 weeks unless there is compensation for the amount of rental income being lost whilst an apartment stands empty.

16. How much will it cost in total to purchase an apartment?
Whilst prices vary, bank charges, stamp duties and agency fees when buying an apartment are all ‘known’ amounts, and can be calculated as follows:
Stamp duty is calculated according to the formula outlined in Question 20,
Agency fees are normally 1% of the purchase price.
Most importantly, you will need a deposit of 30% or more of the purchase price, which of course can add up to several hundred thousand of dollars.
We usually estimate the fees of 5% in total when purchasing a property.
However, if you are renting a property, expect to pay an agency fee equal to 1 month of the rental amount of that property.

Next week: The next 5 most popular questions

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
[email protected]

* Figures expressed in MOP unless otherwise stated