Government Provides Tax Benefits to Participants in Public Maintenance Projects

Acquisition Tax Reduction for Landowners and Comprehensive Real Estate Tax Exemption for Project Implementers
Capital Gains Tax Exemption for Small-scale Housing Maintenance Projects, Corporate Tax and VAT Exemption

[Image source=Yonhap News]

[Sejong=Asia Economy Reporter Kim Hyunjung] The government has decided to provide tax benefits such as acquisition tax reductions and comprehensive real estate tax exemptions to secure supply volume through public-led maintenance projects. This is to reduce the tax burden to a level similar to existing general maintenance projects in order to attract market reactions at the level of the "supply bomb" mentioned during the announcement of the 2·4 measures.

On the 17th, Hong Nam-ki, Deputy Prime Minister and Minister of Strategy and Finance, held a 'Real Estate Market Inspection Meeting with Related Ministers' at the Government Seoul Office and said, "To speed up housing supply by quickly securing residents' consent, we have decided to improve the system so that the 2·4 measures project does not have any tax disadvantages."

The announced plan lowers the acquisition tax rate for participating landowners from the current 1-12% to 1-3%, and exempts the project implementers from comprehensive real estate tax on all real estate owned by the acquired landowners. This measure considers that the 2·4 measures project is conducted in the form of public purchase, resulting in a higher tax burden compared to general maintenance projects, causing participants to hesitate to join the project.

To revitalize small-scale housing maintenance projects with less than 200 households or under 10,000㎡ based on reconstruction standards, capital gains tax exemption will be applied for one household with one occupancy right, similar to general maintenance projects. In addition, corporate tax and value-added tax will not be imposed on the income and sales of small maintenance associations generated during processes such as sales.

Regarding concerns about instability in new land supply, Deputy Prime Minister Hong emphasized, "Land purification work at Yongsan Camp Kim has started since April, and necessary procedures are being carried out or planned for the Public Procurement Service site and Taereung CC. With increased completions after May, it will be possible to secure 460,000 housing units nationwide and 83,000 units in Seoul by the end of the year, and the supply effect will be more noticeable after 2022."

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