Ruling Party and Government Modify Real Estate Policy That Caused 'Public Sentiment Rift'... Will Property Tax Be Eased?

[Sejong=Asia Economy Reporter Kwon Haeyoung] The ruling party and the government are expected to begin full-scale revisions of real estate policies. The Democratic Party of Korea plans to establish a special committee on real estate within the party this week to review overall real estate policies through on-site inspections, consultations with experts, and government discussions. The government is also internally reviewing various issues raised in the political sphere, while maintaining the broad framework of real estate policies such as curbing speculative demand, protecting actual buyers, and eradicating unfair transactions.

According to the ruling party and government on the 18th, the Democratic Party of Korea intends to set up a special committee on real estate within the party this week and complete the necessary policy revisions before the regular National Assembly session.

Yoon Ho-jung, the newly appointed floor leader of the Democratic Party, stated, "We will form a special committee to thoroughly examine issues including taxes, official land prices, and loan regulations."

The Ministry of Economy and Finance is also considering measures to ease the burden of holding taxes such as the comprehensive real estate holding tax (종합부동산세) for actual buyers, including one-homeowners. These measures include expanding deductions for the elderly and long-term holders and raising the official price threshold of 900 million KRW, which is the basis for imposing the comprehensive real estate holding tax. In the tax subcommittee of the Finance Committee, where the amendment to the comprehensive real estate holding tax law is being discussed, lawmakers from both ruling and opposition parties agreed on the need to expand deductions, recognizing that elderly single-home households have limited capacity to pay the tax after retirement and that long-term holders or actual residents are difficult to consider as speculative demand.

It is also reported that adjusting the pace of the government's ongoing official land price realization rate is under consideration. The government is currently promoting a plan to raise the realization rate of official prices for apartments and other multi-family housing to 90% by 2030. This year, the nationwide average increase rate of official prices for multi-family housing was 19.08%, the largest in 14 years. Since official prices are used as the basis for various taxes, charges, and health insurance premiums, an increase in official prices leads to a higher tax burden, resulting in strong demands to slow down the pace.

Additionally, discussions are underway to raise the property tax exemption threshold from 600 million KRW to 900 million KRW or to ease loan regulations such as the loan-to-value ratio (LTV) and debt-to-income ratio (DTI). However, it is widely expected that revisions to the capital gains tax surcharge policy, which recovers up to 70% of short-term trading profits to curb speculation, will be difficult.

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