Question 1

Mr Lee owns a property in Shatin. The property was let to Mr Ma for two years starting from 1 January 2019 under the following terms:

(a) Monthly rent: $22,000 payable at the beginning of each month

(b) Rates and government rent: payable by the landlord

(c) Management fees: $1,000 per month payable by the tenant

(d) Refundable deposit: $44,000

In July 2019, the property underwent certain repairs and it was agreed that both the tenant and the landlord would share the repairs expense equally. The repairs work cost $8,000.

Starting from 1 July 2020, Mr Ma stopped paying the rent due to financial difficulties. He moved out of the property on 31 October 2020 and was then untraceable. The assessor agreed that the rent was irrecoverable from the time Mr Ma moved out from the property.

The property was re-let to Mr Au on 1 December 2020 under the following terms:

(a) Lease period: 1 December 2020 - 30 November 2022 (24 months)

(b) Premium: $48,000 payable on 1 December 2020

(c) Rent free period: 1 December 2020 - 31 December 2020

(d) Monthly rent: $30,000 payable at the beginning of each month

(e) Rates and government rent: payable by the landlord

(f) Management fees: $1,000 per month payable by the tenant

(g) Rent deposit: $60,000

Mr Lee also paid the following expenses during the years of assessment 2019/20 and 2020/21:

2019/20 2020/21

1. Rates 12,000 13,200
2. Government rent 7,200 6,000
3. Outstanding management fee owed by Mr Ma - 3,000
4. Decoration - 50,000
5. Mortgage loan interest for purchase of the property 52,000 43,000

REQUIRED:

Compute the property tax payable by Mr Lee for the years of assessment 2019/20 and 2020/21. Ignore provisional property tax.