"Aligning with Public Expectations" Property Tax Reduction Likely to Increase from 600 Million to 900 Million Won

Reduction of Comprehensive Real Estate Tax and Rental Business Benefits Discussed
Yoon Ho-jung's General Assembly Remarks
"No Change in Direction for Housing Welfare Realization"

Yoon Ho-jung, the floor leader of the Democratic Party of Korea, and Kim Jin-pyo, the chairman of the Real Estate Special Committee, are attending and conversing at the policy members' meeting on real estate held at the National Assembly on the 27th. Photo by Yoon Dong-ju doso7@

[Asia Economy Reporters Koo Chae-eun and Jeon Jin-young] The Democratic Party's general meeting will discuss measures including raising the property tax exemption threshold for single-homeowners (officially assessed value from 600 million KRW to 900 million KRW), as well as raising the comprehensive real estate tax (CRE tax) and capital gains tax exemption thresholds (officially assessed value from 900 million KRW to 1.2 billion KRW). While there is broad consensus within the party on raising the property tax threshold, making its approval likely, opinions on the CRE tax and capital gains tax are sharply divided, making it uncertain whether a consensus can be reached.

On the 27th, Park Wan-joo, the Democratic Party Policy Committee Chair, stated at the policy coordination meeting before the general meeting, "It is true that the overall strengthening of acquisition tax, holding tax, and capital gains tax has intensified the phenomenon of property supply shortage," adding, "The policy to activate rental businesses has also been criticized for turning into a tax haven for multi-homeowners. We recognize this reality and will decide policies that meet the public's expectations." Floor Leader Yoon Ho-jung said in his opening remarks at the general meeting, "The basic direction of suppressing real estate speculation, protecting actual buyers, and realizing housing welfare through housing stability remains unchanged," but added, "We will have in-depth discussions on why the policies implemented so far have not been sufficiently effective."

At the general meeting, the proposal to raise the property tax exemption ceiling to 900 million KRW is likely to pass. Considering the surge in real estate prices during the Moon Jae-in administration, there is little disagreement within the party and government and the special committee on reducing holding tax burdens for single households who actually reside in their homes. However, changing the CRE tax and capital gains tax exemption thresholds to 1.2 billion KRW is expected to face difficulties in reaching consensus. In particular, raising the CRE tax threshold is expected to provoke significant debate at the meeting due to strong public criticism that it amounts to a "tax cut for the wealthy." Other measures expected to be discussed include reducing benefits for rental business operators, lowering the proportion of the point-based system and increasing the lottery system in the housing market subscription system, and increasing the loan-to-value (LTV) ratio?currently 40% (for homes under 900 million KRW in speculative and overheated speculation zones) to 50% (in regulated areas)?by 10 to 20 percentage points for youth and newlyweds, respectively.

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