After Cabinet Meeting Approval on the 7th, Promulgation as Early as the 8th
Enforcement Simultaneous with Promulgation... The Reference Date is the Earlier of the Balance Payment or Registration Date
[Sejong=Asia Economy Reporter Kim Hyunjung] The capital gains tax exemption threshold for single-homeowners will be raised to 1.2 billion KRW as early as the 8th. The earlier date between the house sale balance payment settlement date and the registration date will serve as the reference point.
According to the National Assembly and government authorities on the 6th, the increase in the capital gains tax exemption threshold for single-homeowners will be implemented as early as the 8th. The National Assembly passed an amendment to the Income Tax Act on the 2nd of this month, raising the exemption threshold for single-homeowners from a market price of 900 million KRW or less to 1.2 billion KRW or less.
The enforcement date of the law amendment is the date of promulgation. Initially, the enforcement date was set for January 1 of next year, but the National Assembly’s Finance and Economy Committee revised it to the date of promulgation, and this was approved as is by the plenary session of the National Assembly.
If administrative procedures related to the law amendment are expedited as much as possible, the promulgation date could be moved up to the 8th of this month. Typically, after the National Assembly passes a bill in the plenary session, it is sent to the government, where it undergoes submission and approval at the Cabinet meeting, presidential approval, and a request for publication in the Ministry of the Interior and Safety’s official gazette, which takes more than two weeks. The National Assembly sent the Income Tax Act amendment bill to the government immediately the day after its passage on the 3rd. The government is expected to submit and approve the tax law amendments at the Cabinet meeting on the 7th.
An official from the Ministry of Economy and Finance stated, "The partial amendment bill of the Income Tax Act, including the increase of the capital gains tax exemption threshold for single-homeowners, is scheduled to be submitted to the Cabinet meeting on the 7th," adding, "The government is currently pushing for promulgation on December 8."
For houses sold after the law’s promulgation date, the new capital gains tax exemption threshold will apply based on the earlier date between the registration date and the balance payment settlement date. Generally, since the balance payment settlement date is earlier than the registration date, the balance payment settlement date will be applied.
The amended Income Tax Act grants a capital gains tax exemption benefit to single-homeowners when the actual transaction sale price of the house is 1.2 billion KRW or less. If the price exceeds 1.2 billion KRW, the taxable capital gains are calculated by subtracting the basic deduction and long-term holding special deduction from the capital gains subject to taxation, and then the capital gains tax is determined by applying a tax rate ranging from 6% to 45%.
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