[7·10 Real Estate Measures] Multi-homeowners' Comprehensive Property Tax Rate Up to 6%... From Next Year, the 'Real Comprehensive Property Tax'

[Image source=Yonhap News]

[Sejong=Asia Economy Reporter Joo Sang-don] The government announced the 'June 17 Real Estate Follow-up Measures' on the 10th to stabilize housing prices. The main point is to increase the maximum comprehensive real estate holding tax rate to 6% to raise the tax burden on multi-homeowners, thereby encouraging them to put their houses on the real estate market as listings.

On this day, the government released the 'Housing Market Stabilization Management Plan' containing these details. This is the 22nd measure introduced under the Moon Jae-in administration as a follow-up to the June 17 real estate measures.

First, the government decided to raise the maximum comprehensive real estate holding tax rate to 6%. The current tax rate ranges from 0.6% to 3.2%, with the highest rate applied to properties exceeding 9.4 billion KRW, but this will be increased to 1.2% to 6.0%. Since the June 17 measures also apply the highest individual tax rate to housing holding corporations, multi-homeowner corporations will also be subject to the highest additional tax rate of 6%.

The government had planned to raise the comprehensive real estate holding tax rate to 4.0% in the December 16 measures last year, but it failed to pass the National Assembly. However, after the June 17 measures were announced, nationwide apartment prices rose for three consecutive weeks, and Seoul's weekly apartment prices increased by 0.11%, marking the highest rise in seven months since the December 16 real estate measures. This accelerated related discussions. Initially, the ruling party and government considered three options to raise the maximum tax rate to 4.5%, 5%, or 6%, and ultimately decided on the highest rate in line with the ruling party's emphasis on a 'real comprehensive real estate tax that speculative forces fear.'

Capital gains tax will be increased for those who bought and sold houses within less than two years to gain profits or multi-homeowners who sold houses in regulated areas to gain profits. The capital gains tax rate for sales within one year will rise from 40% to 70%, and for sales within two years, the basic rate of 60% will apply. However, this will be deferred until June 1, 2021, the date of the next comprehensive real estate holding tax imposition, to encourage sales.

The capital gains tax surcharge rate for multi-homeowners in regulated areas will increase by 10 percentage points. For two-homeowners, an additional 20 percentage points, and for three or more homes, an additional 30 percentage points will be imposed on the basic tax rate (6% to 42%). Acquisition tax burdens for multi-homeowners and corporations will also increase. For individuals, 8% for two homes and 12% for three or more homes will apply, and for corporations, a 12% rate will be applied.