[7.10 Real Estate Measures] Maximum Comprehensive Real Estate Holding Tax Rate for Multi-Homeowners at 6.0%

Short-Term Holders Under 1 Year Capital Gains Tax Rate Increased from 40% to 70%

Hong Nam-ki, Deputy Prime Minister and Minister of Economy and Finance, is delivering opening remarks at the "10th Emergency Economic Central Countermeasures Headquarters Meeting" held on the 10th at the Government Seoul Office in Jongno-gu, Seoul. Photo by Kang Jin-hyung aymsdream@

[Asia Economy Reporter Kwangho Lee] The government will raise the maximum comprehensive real estate holding tax rate for multi-homeowners to 6.0%. A uniform rate of 6.0% will be applied to corporations holding multiple homes. Additionally, a capital gains tax rate of 70% will be imposed on houses sold within one year of ownership.

On the 10th, the government held the "10th Emergency Economic Central Countermeasures Headquarters (Economic Central Headquarters) Meeting" at the Government Seoul Office, chaired by Deputy Prime Minister and Minister of Economy and Finance Hong Nam-ki, and announced the "Supplementary Measures to Stabilize the Housing Market," which included these measures.

First, the government will raise the additional comprehensive real estate tax rate for multi-homeowners beyond the December 16 measures last year. For multi-homeowners with a taxable value exceeding 9.4 billion KRW (those owning three or more homes and two homes in regulated areas), the maximum comprehensive real estate tax rate will be set at 6.0%. This is nearly double the current 3.2% rate and 2.0 percentage points higher than the 4.0% rate proposed in the December 16 measures. Last year, 511,000 taxpayers paid the comprehensive real estate tax on housing, accounting for 1.0% of the total population.

A uniform maximum additional tax rate of 6.0% will be applied to corporations holding multiple homes. Previously, the government announced in the June 17 measures that the highest tax rate would be applied as a single rate regardless of the taxable value bracket for corporations holding homes. The basic deduction of 600 million KRW and the tax burden cap applied to individuals will not apply to corporations’ housing comprehensive real estate tax.

The government will also increase the capital gains tax rate on short-term housing held for less than two years. For houses held less than one year, the capital gains tax rate will increase from 40% to 70%. For houses held less than two years, a 60% capital gains tax rate will be imposed.

Acquisition tax rates will also be raised for multi-homeowners and corporations. For those owning two homes, the acquisition tax rate will increase to 8%, and for individuals owning three or more homes or corporations, the acquisition tax rate will sharply rise to 12%.