Strengthening Taxation on Corporate-Owned Rental Housing... Legalization of Related Measures

Ministry of Economy and Finance Announces Legislative Notice for Amendments to the Comprehensive Real Estate Tax Act and Corporate Tax Act Enforcement Decrees

Follow-up Measures to the 'June 17 Housing Market Stabilization Plan'

[Image source=Yonhap News]

[Asia Economy Reporter Joo Sang-don] Going forward, housing registered for long-term lease of 8 years by corporations in designated adjustment areas will also be subject to the comprehensive real estate tax. Additionally, an extra tax rate of 10% will be applied upon transfer.

The Ministry of Economy and Finance announced that it will issue a legislative notice for amendments to the 'Comprehensive Real Estate Tax Act Enforcement Decree' and the 'Corporate Tax Act Enforcement Decree' from the 30th of this month until the 14th of next month.

This amendment is a follow-up measure to the June 17 'Housing Market Stabilization Plan' aimed at strengthening taxation on rental housing held by corporations to prevent multi-homeowners from avoiding tax burdens by dispersing ownership through corporations.

Accordingly, housing registered for long-term lease of 8 years by corporations in designated adjustment areas after the 18th of this month will be subject to comprehensive real estate tax aggregation. Furthermore, an additional tax rate (10%) will be applied upon transfer of such housing. Until now, corporate housing registered for 8-year long-term lease was exempt from the additional tax rate. The increase of the additional tax rate on corporate housing transfers (from 10% to 20%) is planned to be applied from transfers made after January 1 of next year through amendments to the 'Corporate Tax Act.'

The Ministry of Economy and Finance plans to implement these amendments after completing procedures including the legislative notice, vice ministerial meetings, and Cabinet meetings.

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