Legislation Proposed to Reduce Tax Benefits for Real Estate Rental Business Operators

[Image source=Yonhap News]

[Asia Economy Reporter Donghyun Choi] The ruling party is pushing legislation to significantly reduce tax benefits for rental business operators.

According to the National Assembly on the 5th, Kang Byung-won, a member of the Democratic Party of Korea, has introduced the "Comprehensive Real Estate Tax Act," "Restriction of Special Taxation Act," and "Local Tax Special Cases Act" partial amendments, collectively called the "Three Laws to Reduce Real Estate Rental Business Privileges."

Current law provides various tax benefits for rental business operators. Private rental housing, public rental housing, or multi-family rental housing designated by Presidential Decree are stipulated not to be included in the combined tax base. Also, since January 2021, small housing rental business operators renting two or more units have been granted a 20% reduction in income tax or corporate tax, and for long-term general rental housing, a 50% tax reduction is applied. In particular, long-term general private rental housing and long-term rental housing are allowed special taxation benefits even for capital gains tax.

The amendment deletes the provision that private rental housing, public rental housing, or multi-family rental housing designated by Presidential Decree are excluded from the combined tax base for comprehensive real estate tax. Registered rental housing, which has been exempt from combined taxation for comprehensive real estate tax, will now be included in the combined taxation base.

The amendment also removes the provision that since January 2021, small housing rental business operators renting two or more houses receive a 20% reduction in income tax or corporate tax, and a 50% reduction for long-term general rental housing. The provision allowing special taxation benefits for capital gains tax on long-term general private rental housing and long-term rental housing is also deleted.

Furthermore, the amendment plans to abolish provisions that reduce local taxes for the construction of multi-family housing for rental purposes.

Assemblyman Kang Byung-won stated, "In the current unstable real estate market where the majority of the public is anxious, we need to continue stable housing supply while adjusting excessive tax benefits for rental business operators," emphasizing, "The purpose of housing is not speculation but residence."