"Top Priority" Comprehensive Real Estate Tax Law Amendment... What Does It Include?

Increase in Comprehensive Real Estate Tax Law Included in 12·16 Measures
Tax Rate for Multiple Homeowners Raised Up to 4.0%

Government Planned to Apply from This Year's Payment
But Passage Failed in 20th National Assembly, Expected from Next Year

President Moon Jae-in [Photo by Yonhap News]

[Asia Economy Reporter Lee Chun-hee] President Moon Jae-in has identified the amendment of the Comprehensive Real Estate Tax Act as the top legislative priority for the 21st National Assembly. Although this was included in the real estate measures announced on December 16 last year, the revision failed to pass in the 20th National Assembly, leaving the matter to be addressed by the 21st National Assembly.

Kang Min-seok, the Blue House spokesperson, stated in a briefing on the afternoon of the 2nd that President Moon instructed his aides to "consider ways to push the amendment of the Comprehensive Real Estate Tax Act as the government's top legislative priority for the 21st National Assembly." Kang also revealed that at 4 p.m. on the same day, President Moon would summon Minister of Land, Infrastructure and Transport Kim Hyun-mi to the Blue House for an urgent report on real estate measures. A comprehensive review of the recently announced June 17 measures is expected.

The government, through the December 16 measures announced last year, had signaled a general increase in the comprehensive real estate tax rates. Previously, the tax rates were 0.5?2.7% for general taxpayers and 0.6?3.2% for owners of three or more homes or two homes in regulated areas. The plan was to raise these rates to 0.6?3.0% and 0.8?4.0%, respectively, an increase of up to 0.8 percentage points. Additionally, the tax burden cap for two-homeowners in regulated areas, previously set at 200%, was to be raised to 300%. For single-homeowners, a somewhat beneficial measure was included, raising the deduction limit for long-term elderly owners from 70% to 80%.

Government's Comprehensive Real Estate Tax Rate Increase Plan Included in the December 16 Real Estate Measures (Provided by the Ministry of Land, Infrastructure and Transport)

However, these measures have yet to materialize even after more than six months. At the time of the announcement, the government planned to apply the amendment to this year's tax payments. To increase the comprehensive real estate tax for this year's payments, the amendment needed to be passed before the tax base date of the previous month, June 1.

However, following the announcement, the 20th National Assembly entered a deadlock, and with the spread of the novel coronavirus disease (COVID-19), the amendment could not be passed within the term of the 20th National Assembly. Given that the 21st National Assembly, which took over the baton, would find it impossible to complete all procedures from proposal to plenary session approval within just one month of its opening, the increase in the comprehensive real estate tax for this year's payments was naturally thwarted.

The bill containing these provisions has not even been proposed in the National Assembly yet. Currently, six bills to amend the Comprehensive Real Estate Tax Act have been proposed by lawmakers Bae Hyun-jin, Tae Young-ho (two bills), Park Yong-jin, Park Sung-joong, and Yoo Kyung-joon, but all contain different content or even propose lowering the tax rates.

Since President Moon personally instructed that this be pursued as the top legislative priority, the passage of the bill is expected to accelerate rapidly. With the Democratic Party holding an overwhelming majority of 176 seats in the National Assembly, swift amendments are anticipated.

Earlier that day, the Democratic Party also announced plans to re-push amendments related to housing stability, including the Comprehensive Real Estate Tax Act, Income Tax Act, Local Tax Special Cases Act, Housing Act, and Private Rental Housing Special Act. The Democratic Party also plans to add a youth support budget of 360 billion won, including 25 billion won for youth housing financial support, to the third supplementary budget bill.