Signal of Policy Shift... Card for Easing Comprehensive Real Estate Holding Tax (종부세)

Bill Proposed to Raise Limit by 1.2 Billion Won
Expansion of LTV Preferential Rate Benefits
Announcement Possible as Early as End of This Month

The ruling party's move to ease real estate tax regulations has gained momentum.

On the 20th, Kim Byung-wook, the ruling party's floor whip on the National Assembly's Political Affairs Committee and a member of the Democratic Party of Korea, announced that he would take the lead in proposing a revised bill aimed at easing the comprehensive real estate tax (종부세) and property tax. The bill includes raising the comprehensive real estate tax exemption threshold from the current combined official land price of 600 million KRW to 700 million KRW, and increasing the comprehensive real estate tax application threshold for single-home households from 900 million KRW to 1.2 billion KRW. This would significantly reduce the number of people required to pay the comprehensive real estate tax. Despite 25 real estate measures announced over the past four years, housing prices have not been controlled, leading to growing calls for a comprehensive review of real estate policies. In response, this 'easing card' has been introduced. Not only Kim but also the ruling party's real estate special committee and opposition lawmakers are competitively pushing for real estate tax reform, increasing the likelihood of a fundamental policy shift from the strong market pressure policies of the Moon Jae-in administration.

Kim's revision bill is the first legislative proposal since the ruling party's real estate special committee was established the previous day. It includes raising the exemption cap applied to single-home households from 80% to 90%, as well as increasing exemption rates for the elderly and long-term holders. This aims to reduce the tax burden for those who have lived in one home for a long time and for senior citizens. The property tax revision focuses on subdividing the taxable brackets, which currently only apply to properties exceeding 300 million KRW, into three segments: over 300 million KRW up to 600 million KRW, over 600 million KRW up to 1.2 billion KRW, and over 1.2 billion KRW, with partial tax rate reductions. In particular, the special property tax reduction for single-home households will raise the current threshold from 600 million KRW to 1.2 billion KRW, and lower the tax rate for single-homeowners to reduce their property tax burden.

Additionally, Democratic Party lawmakers on the Political Affairs Committee held a closed-door party-government consultation at the National Assembly that morning to discuss easing LTV (Loan-to-Value ratio) regulations. Kim told reporters, "Currently, exceptions of 10 percentage points in LTV are granted to actual buyers, and we plan to discuss with the Ministry of Land, Infrastructure and Transport ways to broaden these exceptions to effectively raise the LTV and expand the DSR (Debt Service Ratio) limits per borrower." Currently, young first-time homebuyers who meet certain criteria can receive an additional 10 percentage points in LTV, allowing them to increase the LTV from 40% to 50% in speculative and overheated speculation zones. The proposal is to expand the pool of eligible recipients. The party and government plan to announce the easing of LTV and DSR regulations for actual buyers by the end of April or early May.

Meanwhile, at the real estate special committee established the previous day, proposals were discussed to raise the comprehensive real estate tax threshold from the current 900 million KRW to 1.2 billion KRW ('price increase' plan) and to set the tax application target as the top 1-2% by ratio. A ruling party policy committee official said, "More weight is being placed on the plan to raise the threshold to 1.2 billion KRW, but there are concerns about side effects, such as housing prices below 1.2 billion KRW rising."

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