Ruling Party's Disorganized Real Estate Measures... Transfer Tax Hike Postponement Likely to Be Excluded

Increasingly Complicated Real Estate Policies, Diverse Solutions
Struggling with Benefits for Income-Less 'Elderly'

[Image source=Yonhap News]

[Asia Economy Reporter Jang Sehee] As the Democratic Party of Korea is releasing a series of disorganized real estate measures, it has been confirmed that the postponement of the capital gains tax surcharge is likely to be excluded from future discussions. This is due to concerns that if the basic principle of strengthening the tax burden on multi-homeowners to curb speculative demand is broken, the effectiveness of policies in the market may be compromised.

According to the ruling party and government on the 2nd, considering the fundamental stance on real estate, the postponement of the capital gains tax surcharge will be discussed as a lower priority. This is based on the judgment that reversing the policy before the implementation of the surcharge system (increase in surcharge tax rate) on June 1 could undermine consistency and reliability in the future. A key official from the Democratic Party stated, "We are reviewing tax relief measures for non-homeowners and single-homeowners," and added, "We also plan to examine whether the tax burden on elderly people without income after retirement is excessive."

Initially, the Democratic Party was expected to review the capital gains tax surcharge policy for multi-homeowners as well, but it was deemed difficult to actually pursue this policy.

The Democratic Party is discussing ways to ease regulations on comprehensive real estate tax and property tax for single-homeowners, centered around the party’s internal Real Estate Special Committee.

First, the ruling party and government are considering raising the comprehensive real estate tax threshold for single-homeowners from the current 900 million KRW to 1.2 billion KRW. They have also tabled a proposal to provide additional tax benefits to long-term residents.

If the comprehensive real estate tax threshold is raised to 1.2 billion KRW, the number of taxpayers subject to the tax will decrease from the current 3.7% to 1.9%. Approximately 267,000 households will be excluded from the comprehensive real estate tax.

Regarding property tax, a plan to raise the exemption ceiling from the current 600 million KRW to 900 million KRW is under strong consideration. Currently, single-homeowners receive a 0.05 percentage point reduction in property tax rates for three years on homes with a publicly announced price of 600 million KRW or less; this threshold would be raised to 900 million KRW.

Property tax sets the upper limit of tax burden increase compared to the previous year at 5% for homes priced at 300 million KRW or less, 10% for those priced between 300 million KRW and 600 million KRW, and 30% for those priced above 600 million KRW. There is also discussion about revising regulations that limit the combined increase in holding taxes (property tax plus comprehensive real estate tax) to within 50%.

Meanwhile, the ruling party and government plan to finalize tax relief measures for single-homeowners by May.

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