First Home Purchase 'Acquisition Tax Reduction for Everyone'... No Limits on Housing Price or Annual Income [6·21 Real Estate Measures]

Full Exemption of Acquisition Tax Within 2 Million KRW Limit... Beneficiary Scope Expanded More Than Twice

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[Asia Economy Reporter Lim Cheol-young] From now on, anyone purchasing a home for the first time in their life will receive acquisition tax reduction benefits regardless of the housing price and annual income limits. The acquisition tax reduction benefits, which were previously based on annual income and housing price, are being expanded, and the burden is expected to be further eased.

On the 21st, the Ministry of the Interior and Safety announced and discussed the expansion plan for acquisition tax reduction for first-time homebuyers as part of the "Real Estate Policy Normalization Tasks" at the 1st Real Estate Ministers' Meeting. The current acquisition tax reduction system for first-time homebuyers applies only to households with a combined annual income of 70 million KRW or less purchasing homes priced at 400 million KRW or less in the metropolitan area and 300 million KRW or less in non-metropolitan areas, with tax reductions applied according to the housing price.

The reduction requirements have reflected the median housing prices at the time the system was implemented in July 2020. Since then, housing prices, especially for apartments in the metropolitan area, have risen, making it difficult for the public to easily feel the policy's effects, according to the Ministry of the Interior and Safety. In particular, because both income and housing price criteria were used to determine eligibility, taxpayers near the threshold experienced a "cliff effect," where slight differences in income or housing price excluded them from the reduction.

According to the plan presented by the Ministry of the Interior and Safety, anyone purchasing a home for the first time in their life will be exempt from acquisition tax regardless of the housing price and annual income, expanding the number of beneficiary households from 123,000 to 256,000 annually, more than doubling the current figure. However, to alleviate the local fiscal burden caused by the reduction in acquisition tax revenue, which is a local tax, and to prevent excessive benefits for high-priced homes, the reduction limit will be capped at 2 million KRW, which is the maximum reduction amount available under the current system.

Meanwhile, since expanding the acquisition tax reduction for first-time homebuyers requires amending the Local Tax Special Cases Act, the Ministry of the Interior and Safety plans to actively promote legislation to ensure prompt legal revision. Minister Lee Sang-min stated, “By expanding the acquisition tax reduction for homes purchased for the first time, we hope to help all citizens realize their dream of owning a home, even if just a little.”

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