Government to Re-push Strengthening of Comprehensive Real Estate Tax Blocked in 20th National Assembly... Opposition Party Advocates Relaxation, Predicting Difficulties

Raising Comprehensive Real Estate Tax Rates and Strengthening Income Tax
First-term United Party Lawmakers from Gangnam District Propose Successive Relaxation Bills

[Sejong=Asia Economy Reporter Kim Hyunjung] The government will reintroduce the comprehensive real estate tax (종합부동산세) enhancement bill, which failed to pass the 20th National Assembly, as a government legislative proposal included in this year's tax reform bill. It will also push for amendments to the Income Tax Act and the Housing Act to raise the capital gains tax rate on houses held for less than two years and to restrict subscription rights for 10 years in cases of illegal resale. Although the government already announced these measures in the second half economic policy direction earlier this month, the opposition party has recently introduced bills to ease the comprehensive real estate tax, making it difficult for the bill to pass the 21st National Assembly.

According to the government on the 15th, the Ministry of Economy and Finance plans to include the amendment bill to the Comprehensive Real Estate Tax Act and follow-up legislation to the '12.16 Real Estate Measures' in this year's tax reform bill and submit it to the National Assembly as a government legislative proposal in early September. The amendment bill, which was discarded in the 20th National Assembly, mainly includes raising the comprehensive real estate tax rate imposed on houses with a publicly announced price of 900 million KRW or more by 0.1% to 0.3% points for single-homeowners, and by 0.2% to 0.8% points for owners of three or more homes or two homes in regulated areas. It also includes raising the comprehensive real estate tax cap for owners of two homes in regulated areas from 200% to 300%.

The Income Tax Act amendment bill is also expected to be proposed together, adding a residence period requirement to the special deduction for long-term ownership for single-homeowners and raising the capital gains tax rate on houses held for less than two years from 40% to 50%. The bill also includes counting pre-sale rights, which were previously excluded from the number of houses subject to capital gains tax surcharges, as part of the house count. Additionally, the Housing Act, which previously did not restrict subscription rights after illegal resale, will be amended to impose a 10-year restriction. The government will also push for amendments to the Local Tax Special Cases Act to reduce acquisition tax and property tax benefits upon rental registration, and amendments to the Private Rental Housing Special Act to strengthen rental business registration requirements and protect tenants from deposit damages.

However, the likelihood of these bills passing smoothly through the 21st National Assembly appears low. Recently, first-term opposition lawmakers have consecutively introduced bills to ease the comprehensive real estate tax as their 'No. 1 bills,' strongly opposing the government's 'war on real estate' stance. Representative Tae Young-ho of the United Future Party, whose constituency is Gangnam-gu, Seoul, has taken the lead in proposing an amendment to the Comprehensive Real Estate Tax Act that excludes one house owned by a single household from the tax base and deducts the publicly announced price of the house actually occupied from the taxable base. Representative Bae Hyunjin of the same party, elected from Songpa-gu, has also proposed an amendment to increase the tax base deduction amount from the current 600 million KRW to 900 million KRW (1.2 billion KRW for single-homeowners) and to raise the deduction rates for long-term owners and seniors aged 60 or older.

The government plans to apply these bills as supplementary bills to next year's revenue budget bill and promote them. This is because reflecting the revenue from the legal amendments is necessary to draft the budget bill relatively accurately. It appears to consider the effect of a kind of tax increase due to the related law amendments. Also, under the National Assembly Act, if the Speaker designates these as supplementary bills to the budget, each standing committee must process the bills by November 30. If no agreement is reached between the ruling and opposition parties by then and the review is not completed, these bills will be automatically submitted to the plenary session along with the budget bill on December 1. This means it will be difficult for the opposition to push only opposing opinions.

This content was produced with the assistance of AI translation services.