Abolition of Elderly Comprehensive Real Estate Tax Deferral Plan... Implementation Within the Year Already Impossible

Ruling Party's Real Estate Policy 'Retreat' Including Imposition of Property Tax on Top 2%

[Image source=Yonhap News]

[Sejong=Asia Economy Reporter Kim Hyun-jung] A bill that would have deferred the payment of comprehensive real estate tax (종합부동산세) for the elderly until they sell, inherit, or gift their homes was discarded in the National Assembly. This occurred as a committee alternative to the originally proposed bill by Democratic Party lawmaker Yoodongsoo was prepared, resulting in the original bill being scrapped. Even if the ruling party rushes to push legislation again, it seems unlikely that it will be implemented within this year due to procedural constraints. This adds another name to the list of the ruling party’s setbacks in real estate policy.

According to the government and National Assembly on the 23rd, the plan to defer the comprehensive real estate tax for the elderly, which was jointly promoted by the government and ruling party, was not included in the amendment to the Comprehensive Real Estate Tax Act approved by the National Assembly’s Planning and Finance Committee on the 19th. This was the result of choosing the committee alternative instead of the 26 proposed amendments submitted so far. On that day, the Planning and Finance Committee approved an amendment to the Comprehensive Real Estate Tax Act that raised the tax base from 900 million KRW to 1.1 billion KRW, instead of the ruling party’s proposal to impose the tax on the top 2% single-home owners.

The elderly comprehensive real estate tax deferral plan was designed to ease the tax burden on elderly people with insufficient cash flow by allowing taxpayers who meet certain income and age requirements to defer payment of the housing portion of the comprehensive real estate tax until the time of disposal of the property. The ruling party’s party-line bill proposed by lawmaker Yoodongsoo set the eligibility for deferral as follows: ▲ being a single-home owner as of the tax base date, ▲ aged 60 or older and residing in the relevant home, ▲ having a comprehensive income of 30 million KRW or less in the previous tax period, and ▲ having a housing portion of the comprehensive real estate tax payment exceeding 2.5 million KRW.

However, this bill was discarded along with the “top 2%” taxation proposal during the process of preparing the committee alternative to the Comprehensive Real Estate Tax Act, which reflected bipartisan negotiations in the Planning and Finance Committee. Even if the ruling party re-promotes it, considering the time required for bill submission in the September regular session, bill passage, and enforcement ordinance work, it is physically impossible to introduce the system within this year.

The elderly comprehensive real estate tax deferral plan originally emerged during discussions in the ruling party’s Special Committee on Real Estate. When the special committee announced its position to impose the tax on the top 2% based on official land prices, the government proposed a fine-tuning plan that maintained the current tax base but introduced a tax deferral system, froze the fair market value ratio at 90%, and established a long-term residence deduction for those residing over 10 years.

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