The Democratic Party Proposes Raising the Non-Taxable Capital Gains Threshold for Single-Homeowners from 900 Million to 1.2 Billion Won

[Asia Economy Reporter Oh Ju-yeon] The Democratic Party of Korea has proposed raising the capital gains tax exemption threshold for single-home households from 900 million KRW to 1.2 billion KRW. Unlike the finalized supply and financial measures, alternatives for capital gains tax and comprehensive real estate tax will be prepared and additionally announced by next month.

On the 27th, the Democratic Party's Real Estate Special Committee (Real Estate Special Committee) announced a plan to raise the current capital gains tax exemption threshold for single-home households from 900 million KRW to 1.2 billion KRW.

According to the "Supply, Financial, and Tax Improvement Plan for Housing Market Stabilization" released that day, the Democratic Party stated that considering the inflation and housing price increases so far, the capital gains tax, which is taxed based on actual transaction prices, needs to be raised from the current exemption threshold of 900 million KRW set in 2008, and proposed raising the capital gains tax exemption threshold for single-home households from 900 million KRW to 1.2 billion KRW. However, no consensus was reached on the final conclusion that day, and alternatives will be prepared by June centered on the Special Committee's plan.

The Special Committee suggested easing capital gains tax, noting the need to align the level with the property tax reduction rate standard (officially assessed value of 900 million KRW ≒ actual transaction price of about 1.2 billion KRW).

The long-term holding special deduction will be applied differentially. Considering the equitable taxation of capital gains increased due to the rapid rise in housing prices, suppression of demand for a single smart home, and public sentiment on real estate, an upper limit on the long-term holding special deduction rate (currently 80%) by capital gains scale was set. To protect genuine buyers, even with the same capital gains, an upper limit will be applied only to the holding period deduction to prevent reverse discrimination against long-term residents. Specific upper limit rates will be legislated in consultation with the Ministry of Strategy and Finance.

The Democratic Party's policy is to strengthen protection for genuine buyers through capital gains tax relief (expanding exemption) while appropriately taxing excessive capital gains caused by rising housing prices (differential application of long-term special deductions) to enhance tax equity.

The Special Committee stated, "Since the capital gains tax improvement plan involves a complete overhaul of the taxation system, it will be publicized through public hearings with the government and experts in June, and after consultations with the government and experts, a final plan will be prepared."

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