[Exclusive] Democratic Party to Propose Bill Raising Comprehensive Real Estate Tax Threshold to 1.5 Billion Won

Park Seong-jun, Democratic Party Lawmaker
Proposes Bill to Raise Comprehensive Real Estate Tax Threshold
From 1.1 Billion to 1.5 Billion Won
Government's 'Temporary Measure' More Lenient Than 1.4 Billion
Includes Tax Deferral for Seniors

Park Sung-jun, Democratic Party of Korea lawmaker

[Asia Economy Reporter Koo Chae-eun] The Democratic Party of Korea is set to propose a bill to raise the comprehensive real estate tax (CRE tax) threshold from the current 1.1 billion KRW to 1.5 billion KRW. This threshold is 100 million KRW more lenient than the temporary exemption amount (1.1 → 1.4 billion KRW) that the government and ruling party have been promoting for this year only.

Originally introduced as a ‘wealth tax’ targeting less than 1% of the richest, the CRE tax has effectively become a ‘middle-class tax’ or ‘Seoul residence tax’ due to rising housing prices, prompting opposition parties to actively propose related amendments as well.

According to the office of Representative Park Sung-jun of the Democratic Party on the 14th, Park is pushing for the ‘Partial Amendment to the Comprehensive Real Estate Tax Act’ to raise the CRE tax threshold for single-homeowners to 1.5 billion KRW. The bill also includes provisions allowing seniors (aged 60 and above) who are single-homeowners and actual residents to defer taxation until inheritance or donation. The bill is expected to be submitted as early as next week after review by the National Assembly Legislative Office.

Significant Increase in CRE Taxpayers Due to Realistic Public Price Adjustments

Within and outside the Democratic Party, there is a consensus that the CRE tax threshold should be eased to reduce the number of ‘unjust CRE tax victims.’ Although criticized as a ‘policy retreat,’ it is seen as a necessary correction to regain the ‘real estate public sentiment’ that was a key factor in the presidential election defeat.

The CRE tax, introduced during the Roh Moo-hyun administration targeting the top 1% wealthy, has lost its original purpose as the number of taxpayers has surged due to realistic public price adjustments and soaring housing prices. According to the National Tax Service, the number of CRE taxpayers increased significantly from 335,591 in 2016 to 1,017,000 in 2021.

Discussions to ease the tax threshold to 1.5 billion KRW were previously raised by the Democratic Research Institute, a think tank of the Democratic Party. They estimated that exempting properties below 1.5 billion KRW would reduce the number of CRE taxpayers in Seoul by 48% and in Gyeonggi Province by 84%. At the policy committee level, an amendment to the Restriction of Special Taxation Act is also being pursued to exclude houses owned by ancestral clans and temporarily owned two homes due to inheritance or relocation from CRE tax calculations.

Ruling and Opposition Parties Intensify CRE Tax Reduction Competition

Park Hong-geun, floor leader of the Democratic Party of Korea, is attending the policy coordination meeting held at the National Assembly on the 14th and delivering opening remarks. Photo by Yoon Dong-joo doso7@

Kwon Seong-dong, Acting Leader of the People Power Party, is attending the Supreme Council meeting held at the National Assembly on the 14th and delivering opening remarks. Photo by Yoon Dong-joo doso7@

Currently, both ruling and opposition parties are competitively pushing for amendments to the CRE tax law to ‘correct the Moon Jae-in administration’s real estate policy failures’ and ‘restore the real estate public sentiment lost due to election defeat.’ The People Power Party, led by Representative Ryu Seong-gul, is proposing a bill to raise the CRE tax threshold for single-homeowners from 1.1 billion KRW to 300 million KRW and to allow temporary two-homeowners due to relocation or those who inherited homes to defer CRE tax payments.

The Democratic Party is focusing on raising the CRE tax threshold for multi-homeowners to 1.1 billion KRW. Following a proposal by Song Young-gil, then Seoul mayoral candidate, in May, the party agreed to ease the CRE tax threshold for multi-homeowners from the current 600 million KRW to the same 1.1 billion KRW as single-homeowners. Representative Kim Young-jin, who was the Democratic Party’s floor leader on the National Assembly’s Planning and Finance Committee during the first half of the 21st National Assembly, has already introduced a bill reflecting this change.

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