Government "Considering Exemption from Comprehensive Real Estate Tax Increase for Rental Housing Supply Construction Companies"

The government is expected to announce plans to expand housing supply in the Seoul metropolitan area as early as this week. The plan is likely to include developing vacant sites in Seoul and sites of national research institutes into housing supply areas, as well as increasing the supply volume in existing development zones. The photo shows the city center view from Namsan, Seoul, on the 27th. Photo by Moon Honam munonam@

[Asia Economy Reporter Song Seung-yoon] As the government plans to raise the comprehensive real estate holding tax (종부세) on corporate-owned housing under the 'July 10 Real Estate Measures,' it is considering exempting housing construction companies engaged in rental housing businesses.

On the 28th, the Ministry of Economy and Finance and the Ministry of Land, Infrastructure and Transport stated in a press release, "The government plans to ensure that there will be no increase in tax burden through future amendments to the Enforcement Decree of the Comprehensive Real Estate Holding Tax Act for cases where housing ownership is unavoidable in the course of corporate activities and is unrelated to speculative demand."

They added, "Currently, comprehensive real estate holding tax is exempted for employee housing, dormitories, and rental housing constructed or purchased with a publicly announced price of 600 million KRW or less owned by corporations." This explanation addresses concerns that the increase in 종부세 on corporations might affect private construction rental housing and shrink the rental housing business conducted by housing construction companies.

Previously, under the July 10 measures, the government imposed a much heavier 종부세 burden on multi-homeowner corporations than on individual multi-homeowners. Corporate housing will be subject to the highest tax rate regardless of the housing value, applying a 종부세 rate of 3.0% for two or fewer houses, and 6.0% for three or more houses or two houses in regulated areas. Additionally, the 600 million KRW basic deduction was abolished.

Meanwhile, the government plans to apply exceptions during the amendment of the enforcement decree to the Korea Land and Housing Corporation (LH) and Seoul Housing and Communities Corporation (SH Corporation), which operate public rental housing projects, to prevent an increase in their tax burden. It is known that the government will reflect this in the amendment, considering calls for policy consideration to prevent public enterprises supplying rental housing for low-income households from suffering unintended damage.

LH and SH Corporation plan to collectively propose to policy authorities to add land lease-type sale housing to the 'exclusion from aggregation' category, which exempts them from paying 종부세.

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