[Exclusive] Temporary Two-Home Owners Exempt from Acquisition Tax Surcharge if Selling Within 2 Years

If Not Disposed Within 1 Year, Up to 8% Additional Transfer Tax Applied
Acquisition Tax Surcharge Conditions Also Partially Relaxed to Align with Transfer Tax Exemption Criteria
For New Home Acquisitions as of May 10, If Disposed Within 1 Year, Acquisition Tax Surcharge Exemption Period Expected to Extend to 2 Years

Archive photo / Photo by Mun Ho-nam munonam@

[Asia Economy Sejong=Reporter Kwon Haeyoung] In the future, if a temporary two-homeowner is created within the regulated areas including Seoul due to "switching houses," the acquisition tax surcharge can be avoided by disposing of the existing house within 2 years after acquiring the new house. Previously, if the existing house was not sold within 1 year, the acquisition tax was surcharged up to 8%, but now the disposal period is extended by 1 year. This reflects the new government's intention to normalize the previous government's real estate tax system, which excessively regulated not only multi-homeowners but also temporary two-homeowners who are genuine buyers, to curb housing price increases.

According to related ministries on the 12th, the Ministry of the Interior and Safety is reviewing the revision of the Enforcement Decree of the Local Tax Act based on these contents. A government official said, "As the requirements for temporary two-homeowners to receive capital gains tax exemption have recently been relaxed, the need to normalize the acquisition tax surcharge has increased," and added, "We are currently promoting the revision of related laws."

Currently, a single homeowner is subject to an acquisition tax rate of 1-3% of the house price, two-homeowners up to 8%, and three or more homeowners up to 12%. Previously, only four or more homeowners were subject to a flat rate of 4%, but to suppress housing demand, the acquisition tax rate for two-homeowners was significantly increased from July 2020. Meanwhile, for temporary two-homeowners in regulated areas, the previous acquisition tax rate was applied first, and if the existing house was not sold within 1 year, the strengthened acquisition tax rate was applied.

The government's decision to ease the acquisition tax surcharge conditions for temporary two-homeowners after two years aligns with the relaxation of capital gains tax exemption requirements implemented with the new government. The Ministry of Economy and Finance extended the disposal period of the existing house for temporary two-homeowners to receive capital gains tax exemption from within 1 year to within 2 years after acquiring the new house on the day before President Yoon Seok-yeol's inauguration, the 9th. This measure aims to prevent unintended victims caused by the sharp decline in housing transactions recently, where existing houses were not sold within 1 year.

The timing for applying the exclusion of acquisition tax surcharge for temporary two-homeowners promoted by the Ministry of the Interior and Safety has not yet been decided, but it is highly likely to be based on the 10th of this month when the capital gains tax exemption relaxation takes effect. The Ministry of the Interior and Safety is actively considering retroactively applying the extension of the disposal period so that there are no temporary two-homeowners who are subject to acquisition tax surcharge because the 1-year disposal period expires before the revised enforcement decree takes effect, even if the 1-year disposal period has not yet arrived as of May 10.

Furthermore, the progressive acquisition tax rates, which apply up to 12% depending on the number of houses owned, will also be generally eased. This is in line with the new government's real estate policy direction to reduce taxes throughout the entire process of acquiring, holding, and transferring houses to encourage the release of listings and stabilize the real estate market.