According to the Amendment of the Enforcement Decree of the Comprehensive Real Estate Tax Act, Inherited Houses Are Excluded from the Number of Houses Subject to Heavy Taxation for 2-3 Years
Existing Requirements of 20% Shareholding and Officially Announced Price Below 300 Million Won Abolished
[Sejong=Asia Economy Reporter Kim Hyunjung] The government has decided to exclude inherited houses from the comprehensive real estate tax (CRET) surcharge housing count for up to three years. However, it has made clear that even if the ownership share is small, no exceptions or special cases will be allowed if the grace period is exceeded. This revised regulation will be uniformly applied to inheritances initiated after the enforcement date, regardless of the intention to dispose of the inherited house.
According to the Ministry of Economy and Finance on the 8th, under the revised enforcement decree of the CRET Act announced on the 6th, if an inherited house or co-ownership share is not disposed of within three years at the latest, even a 1% share will be counted as a house, making an inheritor who previously owned one house a multi-homeowner. Until now, inherited houses were permanently excluded from the surcharge housing count if the co-inheritance share was 20% or less and the official price was 300 million KRW or less, but these related conditions have been abolished.
Instead, the government has set a maximum of three years as the "time to sell" for both joint and sole inherited houses. Considering that sales transactions are relatively easier in the metropolitan area, special self-governing cities (excluding eup and myeon areas), or metropolitan cities, the grace period is two years there, and three years in other regions, during which the houses will not be counted in the housing number. However, for tax fairness, these houses will be included in the tax base.
The problem is that if even a partial share is not disposed of within two to three years, a previous single-homeowner becomes a multi-homeowner, which can sharply increase the tax burden. The CRET taxation threshold for a single household with one house is 1.1 billion KRW based on the official price, but for multi-homeowners, it drops to 600 million KRW. Moreover, the CRET rate for one-house owners ranges from 0.6% to 3.0%, whereas for two or more houses in regulated areas, it ranges from 1.2% to 6.0%. A Ministry of Economy and Finance official explained, "There may be cases where disposal is not possible or not done due to personal circumstances or additional price increases, or cases where disposal was attempted but failed, but all these situations are the same for multi-homeowners other than inheritance. Permanently granting a grace period would not be fair."
On the other hand, the government is reportedly reviewing and planning to announce multiple measures to ease the CRET around March this year when apartment official prices are released. The currently discussed measures include using last year's official prices for this year's CRET tax base calculation, lowering the tax burden cap (150%), and temporarily deferring CRET payments for elderly single-homeowners. The National Assembly is also discussing excluding rural and fishing village houses from CRET taxation.
However, some criticize the Moon Jae-in administration for suddenly shifting to a tax relief policy ahead of the presidential election at the end of its term, after having strengthened real estate holding and transaction taxes and enacted the three lease laws, which caused side effects such as rising house sale and jeonse prices. In particular, using the previous year's official prices as this year's tax base is pointed out as a direct contradiction to the government's consistent claim of official price realization and as a short-sighted, deceptive measure.
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