Temporary Tax Benefits for Two-Home Owners... Controversy Over Conditions Like Moving, Inheritance, and Marriage Unavoidable

Legal Amendments Must Be Completed by the End of August to Apply from This Year

The volume of apartment sales in Seoul has turned to an upward trend for the first time in eight months. According to the Seoul Real Estate Information Plaza, the number of sales transactions in Seoul in March was 937, a 16.4% increase compared to the previous month (805 transactions). This marks a rebound after seven consecutive months of decline from August last year (4,064 transactions) through February this year (805 transactions). It appears that the market, which had been frozen due to expectations of regulatory easing, is beginning to breathe again. A view of apartments from Namsan on the 11th. Photo by Moon Honam munonam@

[Asia Economy Reporter Kangwook Cho] As the government is considering granting the same tax benefits to temporary two-homeowners due to unavoidable reasons as those given to single-homeowners per household, controversy over the eligibility criteria and timing is inevitable.

According to government ministries and the National Assembly on the 17th, amendment bills to the Restriction of Special Taxation Act and the Comprehensive Real Estate Tax Act are currently pending in the National Assembly. This is because granting benefits to temporary two-homeowners requires legal amendments.

The amendment to the Comprehensive Real Estate Tax Act, introduced by Ryu Seong-geol of the People Power Party, includes provisions to exclude the previous home, as defined by Presidential Decree, from the tax base aggregation when a single-homeowner acquires another home before transferring their current home, temporarily holding two homes.

However, if the additional home is not disposed of within six months from the date of holding two homes, the reduced tax amount and interest-equivalent surcharge will be reclaimed. The bill includes a supplementary provision to take effect from the date of promulgation.

The amendment to the Comprehensive Real Estate Tax Act, introduced by Kim Mi-ae of the People Power Party, extends benefits not only to cases where another home is acquired as a replacement before transferring a single home but also to cases of holding two homes due to inheritance, cohabitation care, marriage, etc., as defined by Presidential Decree. It also allows a longer disposal period of up to two years from the date of holding two homes to avoid tax reclaim. The bill specifies in its supplementary provisions that it will take effect six months after promulgation.

Yoon Hu-duk of the Democratic Party proposed amending the Restriction of Special Taxation Act to expand tax benefits for temporary two-homeowners. In cases where temporary two-homeownership arises due to a child's school enrollment, job transfer, inheritance, etc., the newly acquired home will be excluded from the comprehensive real estate tax aggregation for two years to avoid being classified as a multi-homeowner and subject to heavy taxation.

In this case, those who became temporary two-homeowners due to moving or owned a hometown house and were classified as two-homeowners, paying more tax when paying last year's comprehensive real estate tax, will be eligible for a refund this year.

Further discussions are needed on which law to amend between the Comprehensive Real Estate Tax Act and the Restriction of Special Taxation Act, how to define the conditions for temporary two-homeownership, the reclaim period, and the timing of enforcement.

There is also controversy over whether to aggregate official assessed prices for taxation. The pending legislative proposals in the National Assembly aim to exclude one home from the tax base for temporary two-homeowners, but there are concerns that this could lead to excessive tax benefits and potentially reduce tax revenue.

To provide benefits to temporary two-homeowners starting this year, the law must be amended by at least the end of August.

Earlier, the government announced measures to reduce tax burdens by applying the 2021 official assessed prices when single-homeowners pay this year's comprehensive real estate tax and introducing payment deferrals for the elderly.