Party and government to push for 12% increase in gift acquisition tax rate next month

[Asia Economy Reporters Inho Yoo and Sangdon Joo] It is expected that the Local Tax Act amendment, which raises the acquisition tax rate on gifts for multi-homeowners to a maximum of 12%, will be abruptly implemented as early as next month.

This is interpreted as a measure to block such an escape route, as concerns have been raised that multi-homeowners would turn to gifting rather than selling their homes following the announcement of the July 10 real estate measures.

According to political circles and the government on the 14th, Han Byung-do, the Democratic Party floor leader of the National Assembly's Public Administration and Security Committee, is reportedly planning to officially propose the Local Tax Act amendment by the 15th at the latest. Once the Ministry of Strategy and Finance prepares the Local Tax Act amendment, it will be immediately pushed forward in the form of a member's bill.

The Local Tax Act amendment is reportedly considering raising the gift acquisition tax rate, which is currently 3.5%, to a maximum of 12% when receiving a gifted house.

Unlike the general acquisition tax, the gift acquisition tax has applied a single tax rate regardless of the number of houses, but this will be aligned with the general acquisition tax rate level (up to 12%) introduced in the July 10 measures.

In particular, to prevent multi-homeowner parents from making illicit gifts to their children without homes, the number of houses will be calculated by combining the household.

The implementation timing is likely next month. Representative Han plans to specify the phrase "effective from the date of promulgation" in the amendment's supplementary provisions without any separate transitional measures. While the capital gains tax rate increase to encourage multi-homeowners to sell properties has been deferred until May next year, gifting, which causes a freeze in supply, will be implemented immediately without a grace period.

Minister of Land, Infrastructure and Transport Kim Hyun-mi also appeared on a radio broadcast that morning and, regarding concerns that multi-homeowners might choose gifting over selling due to increased capital gains tax burdens, stated, "We are reviewing measures with the financial authorities to ensure that gifting is not more advantageous than sales."

Meanwhile, Minister Kim said on the broadcast that regarding criticisms that the July 10 measures have significantly increased the tax burden on multi-homeowners and actual residents, "The purpose is not to increase taxes," adding, "It is a measure to eliminate unearned income in the real estate market." She further added, "There is no need to use this tax system for the purpose of tax increases."

In response to a question about whether the tax burden on single-homeowners has increased, Minister Kim dismissed it, saying, "There is almost no change for single-home actual demanders (even with the measures)," and rebutted, "The increase in tax burden this time is only for multi-homeowners with two or more or three or more houses in regulated areas, which accounts for about 0.4% of the total, so there is almost no tax burden on single-home actual owners."

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