Government Officially Announces After Cabinet Meeting on the 7th
The Earlier Date Between Final Payment and Registration is the Standard
[Sejong=Asia Economy Reporter Kim Hyunjung] The capital gains tax exemption threshold for single homeowners is being raised from 900 million KRW to 1.2 billion KRW in actual transaction price starting from the 8th. To minimize market confusion, the government expedited the schedule to implement the amendment within six days by fast-tracking the bill after its passage.
On the 7th, the government held a Cabinet meeting at the Government Seoul Office and confirmed the enforcement date of the amended Income Tax Act, which raises the capital gains tax exemption threshold, as the 8th. The National Assembly passed the amendment on the 2nd, raising the exemption threshold for single homeowners from 900 million KRW to 1.2 billion KRW in market price, stipulating the enforcement date as the date of promulgation.
The transfer date is the earlier of the registration date and the final payment date. Generally, since the final payment date is earlier than the registration date, the final payment date is applied. The amended Income Tax Act grants tax exemption benefits to single homeowners when selling a house if the actual transaction price is 1.2 billion KRW or less.
If the price exceeds 1.2 billion KRW, the taxable capital gains are calculated by subtracting the basic deduction and long-term holding special deduction from the capital gains, and then the capital gains tax is determined by applying a tax rate ranging from 6% to 45%.
The government also decided to promulgate the amended Value-Added Tax Act, which passed the National Assembly on the 2nd, on the 8th. The amended VAT Act includes provisions to transfer part of the VAT to local consumption tax, thereby increasing the local consumption tax rate.
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