D-10 to the Comprehensive Real Estate Tax Deadline... Ruling Party Proposes '70% Fair Value Ratio' (Summary)

Opposition Unresponsive to Agreement on Raising Tax Credit Threshold
Ryu Seong-geol: "Practically, Fair Market Value Ratio 70%, 1.2 Billion Won Special Deduction Intent"

Ryu Seong-geol, member of the People Power Party./Photo by Yoon Dong-ju doso7@

[Asia Economy reporters Lee Ji-eun and Na Ju-seok] The People Power Party officially proposed to the opposition party a plan to raise the lower limit of the fair market value ratio, which determines the tax base for the comprehensive real estate holding tax (종부세), from the current 60% to 70% in order to push through an increase in the special deduction limit for the comprehensive real estate holding tax. Since the National Tax Service is scheduled to review the tax data for the comprehensive real estate holding tax and send it to the Ministry of the Interior and Safety on the 20th, it appears that the final negotiation card was presented with the view that an amendment to the Restriction of Special Taxation Act must be made by that day.

Ryu Seong-geol, a ruling party member of the National Assembly’s Planning and Finance Committee, said at the party’s National Assembly inspection countermeasure meeting on the 11th, "The deadline for amending the Restriction of Special Taxation Act is just seven days away. The amendment bill must pass the Planning and Finance Committee within this week." He added, "Let’s raise the lower limit of the fair market value ratio and increase the additional special deduction limit through bipartisan agreement."

Ryu emphasized, "Even if the Restriction of Special Taxation Act passes, the burden on couples jointly owning one house cannot be avoided," but added, "The grievances of those who became subject to the comprehensive real estate holding tax as house prices rose can definitely be alleviated."

The ruling party is pushing for an amendment to the Restriction of Special Taxation Act to raise the special deduction standard for one-household-one-homeowners to 1.4 billion won, but the opposition party refuses to agree to raising the tax credit standard, arguing that the government preemptively lowered the fair market value ratio to 60%, effectively providing a ‘tax cut for the rich.’

If the opposition party accepts the ruling party’s proposal to discuss raising the special deduction standard for the comprehensive real estate holding tax, the realistic figure is expected to be 1.2 billion won. The ruling party proposed 1.2 billion won as the special deduction standard, cutting 200 million won from the government’s original 1.4 billion won plan, but the opposition party rejected even this. The opposition party has stated that to raise the comprehensive real estate holding tax deduction standard from the current 1.1 billion won to 1.2 billion won, the fair market value ratio must be raised to 80%.

In a phone interview with Asia Economy, Ryu said, "I have realistically mentioned 1.2 billion won," adding, "The intention is to apply a 70% fair market value ratio with a 1.2 billion won special deduction."

He said, "Since the enforcement decree was already amended in August to set the fair market value ratio at 60% and is currently in effect, the 70% application will likely start next year," and warned, "If there is no proactive agreement, the Democratic Party will have to take responsibility for this year’s comprehensive real estate holding tax."

As the ruling and opposition parties show differences over the chairmanship of the Planning and Finance Committee’s tax subcommittee, the committee has yet to even form the subcommittee. Ryu stated, "The National Assembly inspection runs until the 24th, and I will gather party opinions once again before then."

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