"Strengthening Burden on Multi-Homeowners" Punitive Taxation Scheduled for Legislation This Week

Consideration of 'Acquisition Tax Reduction' for First-Time Buyers Including Youth and Newlyweds

[Image source=Yonhap News]

[Asia Economy Reporter Jang Sehee] A plan is being promoted to impose punitive-level taxes on multi-homeowners who own two to three or more houses and speculative traders who buy and sell within one to two years. This aims to eliminate speculative demand by raising the holding tax and transaction tax measures proposed in the December 16 and June 17 real estate policies last year to a higher level.

According to the Ministry of Economy and Finance and the Democratic Party on the 5th, the government and ruling party plan to submit a bill to the National Assembly this week that includes comprehensive real estate tax and capital gains tax revisions. It is interpreted that they intend to pass it in the July National Assembly by promoting it in the form of rapid legislative proposals by lawmakers.

From the perspective that stronger penalties should be imposed on those who buy and sell houses as speculative means, they are considering punitive-level taxation beyond general income taxation.

The government and ruling party prioritize strengthening holding taxes (property tax and comprehensive real estate tax) from this perspective.

Through the December 16 measures, the government proposed imposing a comprehensive real estate tax rate of up to 4.0% on multi-homeowners, but it was not processed in the 20th National Assembly. The government is considering reducing the basic deduction for the comprehensive real estate tax (600 million KRW; 900 million KRW for one household with one house) and lowering the taxable value brackets.

Along with the comprehensive real estate tax, strengthening property tax, which forms one pillar of holding taxes, is also being discussed. To block speculative short-term trading, they are also considering raising the capital gains tax rate on houses held for less than two years. They are also reviewing plans to further increase the capital gains tax surcharge rate for multi-homeowners and extend the holding and residence period that qualifies for capital gains tax exemption benefits beyond the current standard.

Meanwhile, measures are being promoted to reduce acquisition tax and ease the tax burden for first-time buyers such as young people and newlyweds.