From Next Year, 'Bunyang Rights' Also Considered Housing... Capital Gains Tax Rate 16~52% for Bunyang Rights + 1 Homeowners

[Asia Economy Reporter Jang Hyowon] Starting next year, pre-sale rights will be included in the number of houses for the purpose of imposing capital gains tax. If a person owning three or more houses including pre-sale rights sells a house after June next year, the capital gains tax will be increased by up to 30 percentage points.

[Image source=Yonhap News]

According to the National Assembly and the government on the 19th, a partial amendment bill to the Comprehensive Real Estate Tax Act containing these provisions is currently pending in the National Assembly.

This bill was jointly proposed by Rep. Ko Yong-jin, the Democratic Party's ranking member of the National Assembly's Planning and Finance Committee, along with 13 other lawmakers. It is effectively a government-ruling party proposal jointly created by the Ministry of Strategy and Finance and the Democratic Party. The ruling party plans to complete the legislative process for this bill during the July extraordinary session of the National Assembly.

The bill includes provisions that consider pre-sale rights as houses when calculating capital gains tax during the sale of houses in regulated areas.

Previously, pre-sale rights were not included as houses for tax purposes when determining multi-home ownership because they were not existing houses. They were only counted in the number of houses when applying for loans or subscription rights. However, going forward, a person owning one house and one pre-sale right will be considered a two-home owner for tax purposes.

The enforcement date of this regulation is for transfers made from January 1 next year. From next year, if a person owning one house and one pre-sale right sells a house, the basic tax rate (6-42%) will be increased by 10 percentage points. For those owning three or more houses including pre-sale rights, the capital gains tax rate will be increased by 20 percentage points.

Additionally, according to the government's July 10 measures, the capital gains tax surcharge rates for multi-home owners will be raised from 10 percentage points for two-home owners and 20 percentage points for three or more home owners to 20 percentage points for two-home owners and 30 percentage points for three or more home owners. From June next year, multi-home owners could pay up to 72% in capital gains tax.

Furthermore, taxation on trading pre-sale rights will be strengthened. Under current regulations, 50% of the capital gains from pre-sale rights in regulated areas are taxed. For other areas, the basic tax rate (6-42%) applies.

From June next year, if pre-sale rights held for less than one year are transferred, 70% of the gains will be reclaimed. Even if held for more than one year, if sold in the pre-sale rights state, 60% of the gains will be reclaimed. There will be no distinction in tax rates based on whether the area is regulated or not.

Since pre-sale rights are also considered houses for tax purposes, this measure raises the capital gains recovery rate on short-term trading of houses or move-in rights to a level equivalent regardless of whether the area is regulated or not.

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