Ruling Party and Government Agree on Property Tax Reduction for Single-Homeowners... "Capital Gains Tax Surcharge to be Implemented as Scheduled in June"

No Extension for Capital Gains Tax Surcharge Postponement
Discussion on Raising Comprehensive Real Estate Tax Threshold to 1.2 Billion KRW and Acquisition Tax Reduction for Actual Buyers

Kim Jin-pyo, Chairman of the Real Estate Special Committee of the Democratic Party of Korea, is attending the Real Estate Special Committee meeting held at the National Assembly Members' Office Building on the 12th and delivering a greeting. Photo by Yoon Dong-joo doso7@

[Asia Economy Reporter Jang Sehee] The ruling party, government, and Blue House have agreed to raise the property tax exemption threshold for single-homeowners from the current 600 million KRW to 900 million KRW, but have decided not to extend the capital gains tax surcharge deferral. The goal is to prevent market confusion before June 1, the property tax assessment date. They also plan to accelerate the preparation of follow-up measures such as comprehensive real estate tax and acquisition tax.

On the 19th, a senior government official stated, "There is a consensus to raise the property tax exemption threshold for single-homeowners," adding, "We are also positively considering expanding the cap on tax credits for long-term holders and the elderly." The ruling party and government identified property tax and tax credit supplements for actual buyers as the primary revised measures. If the property tax exemption target expands from a publicly announced price of 600 million KRW to 900 million KRW, about 590,000 apartment households are expected to benefit.

Ruling Party to Tackle 'Property Tax' First Amid Public Opinion Deterioration

Earlier, as the burden of holding taxes increased due to rising publicly announced prices, the government introduced a special tax rate this year that reduces the tax rate by 0.05 percentage points for each bracket for single-homeowners holding homes valued at 600 million KRW or less.

Currently, property tax is levied by multiplying the tax base, which applies a 60% fair market value ratio to the publicly announced price, by a property tax rate ranging from 0.1% to 0.4% depending on the bracket. For 60 million KRW or less, the rate is 0.1%; for 60 million to 150 million KRW, 0.15%; for 150 million to 300 million KRW, 0.25%; and for over 300 million KRW, 0.4%.

The ruling party and government also decided not to extend the capital gains tax surcharge deferral. Regarding this, Yoon Ho-jung, floor leader of the Democratic Party, said on the 18th, "The deferral was intended to encourage multi-homeowners to sell their properties within a year, but it was ineffective," adding, "If it is deferred again, there is little chance that more properties will come onto the market." He continued, "I am not the only one who agrees; I believe many, including Representative Song Young-gil and members of the real estate subcommittee, share similar views."

Comprehensive Real Estate Tax Threshold Raised to 1.2 Billion KRW, Discussion on Acquisition Tax Exemption for First-Time Homebuyers

The key issues are the comprehensive real estate tax and acquisition tax. Kim Jin-pyo, chairman of the Democratic Party's real estate special committee, directly mentioned raising the comprehensive real estate tax threshold from 900 million KRW to 1.2 billion KRW, accelerating momentum.

However, the Blue House is taking a cautious stance. Lee Ho-seung, director of the Blue House policy office, stated regarding the adjustment of the comprehensive real estate tax threshold, "There should be strong consideration from the perspectives of demand and tax fairness."

There is also discussion about reducing acquisition tax for actual buyers such as the homeless or single-homeowners. Although there is an acquisition tax exemption system for first-time homebuyers, it currently targets homes priced at 400 million KRW or less in the metropolitan area and 300 million KRW or less outside the metropolitan area, which is far from the current market. A government official said, "It is true that raising the property tax exemption threshold and the comprehensive real estate tax threshold are major discussion points," adding, "We will additionally review tax credits and acquisition tax."

In this regard, Kwon Dae-jung, professor of real estate at Myongji University, said, "Raising the comprehensive real estate tax threshold to 1.2 billion KRW and increasing the property tax exemption threshold to 900 million KRW will elicit some response in the market."

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