[Enforcement Decree of the Tax Act] Pre-sale Rights Also Considered Housing... Included in the Calculation of Multiple Homeowners for Transfer Tax Surcharge

[Image source=Yonhap News]

[Sejong=Asia Economy Reporter Kim Hyunjung] Starting this year, even those who own one house and a pre-sale right will be classified as multi-homeowners subject to capital gains tax surcharges, just like holders of cooperative member move-in rights.

The Ministry of Economy and Finance announced on the 6th the "2020 Tax Law Amendment Follow-up Enforcement Decree Revision," which includes this content.

Until now, move-in rights have been included in the number of houses for capital gains tax purposes, but pre-sale rights were excluded from the house count. When a single household owning one house acquires a move-in right and sells the previous house, the case corresponds to a temporary "one house and one move-in right," and the non-taxation for a single household with two houses was applied, excluding the application of the 2-householder surcharge tax rate (basic tax rate + 10 percentage points) in regulated areas.

However, through this income tax law amendment, the government has made pre-sale rights included in the number of houses in the same way as move-in rights. The revised law applies to pre-sale rights newly acquired after January 1.

Although move-in rights and pre-sale rights share the commonality of being "rights" to own a new apartment, they fundamentally differ significantly in the process of holding, investment costs, and taxation.

Assuming Mr. A owns a reconstruction or redevelopment house, this house becomes a cooperative member move-in right after the establishment of the association, approval of the project implementation, and approval of the management disposition plan. After approval, even if the actual building has not been demolished, the house is considered destroyed, and cooperative members are granted the status of "move-in rights" to move into the newly constructed apartment. On the other hand, pre-sale rights are rights received by the general public through subscription or other means by signing a sales contract with a construction company, regardless of the designation of a land development project area.