'Measures to Eradicate Real Estate Speculation and Prevent Recurrence'
Up to 20 Percentage Point Increase in Tax Rates on Non-Business Land and Properties Held Less Than 2 Years
Introduction of LTV Restrictions on Household Non-Housing Secured Loans
[Asia Economy Reporter Jang Sehee] Starting next year, the capital gains tax surcharge rates on land held for less than two years and non-business-use land will be increased by 10 to 20 percentage points. Additionally, to prevent the recurrence of land speculation scandals involving the Korea Land and Housing Corporation (LH), all public officials will be required to register their assets.
On the 29th, Hong Nam-ki, Deputy Prime Minister and Minister of Economy and Finance, held a briefing after the 'Fair Society Anti-Corruption Policy Council' chaired by President Moon Jae-in at the Blue House, stating, "We will significantly reduce the expected profits from speculative transactions of land and farmland." He emphasized the strong implementation of acquisition screening, strengthened land taxation, and collateral loans.
First, the capital gains tax rate on land held for less than one year will be raised from 50% to 70%, and for land held less than two years, from 40% to 60%. Furthermore, the surcharge rate on non-business-use land transfers will be increased from the current 10 percentage points to 20 percentage points. The application of the long-term holding special deduction, which is up to 30%, will also be excluded.
The government plans to introduce Loan-to-Value (LTV) regulations on non-housing collateral loans across all financial sectors. In addition, submission of a funding plan will be made mandatory when acquiring land above a certain scale, to be used as data for judging speculation.
Deputy Prime Minister Hong announced that all public officials will be required to register their assets, and that, in principle, all LH employees will be restricted from acquiring new real estate except in exceptional cases.
Hong emphasized, "We have prepared 20 key measures covering all stages from prevention, detection, punishment, to recovery," adding, "First, to fundamentally block real estate speculation by public officials, all public officials will be required to register their assets in principle." Currently, about 230,000 public officials, mainly high-ranking ones, register their assets with the Ministry of Personnel Management, but going forward, all employees of real estate-related agencies including LH and the Seoul Housing and Communities Corporation (SH) will be subject to asset registration.
Hong said, "In this case, about 70,000 additional people will be added to the Ministry of Personnel Management's registration target," and added, "The remaining approximately 1.3 million public officials who are not subject to registration with the Ministry will operate their own asset registration systems under the supervision of their respective institution's audit departments, so that everyone registers their assets."
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