[6·21 Real Estate Measures] Choo Kyung-ho: "If Rent Increase is Within 5%, Capital Gains Tax Exemption Applies" (Comprehensive)

"Complete Exemption of 2-Year Residency Requirement for Capital Gains Tax Exemption and Long-Term Special Deduction"
Deadline for Disposing Existing Home Extended to 2 Years When Executing Mortgage Loan in Regulated Areas... Obligation to Move into New Home Also Abolished

[Image source=Yonhap News]

[Asia Economy Sejong=Reporter Kwon Haeyoung] On the 21st, Deputy Prime Minister and Minister of Economy and Finance Choo Kyung-ho stated, "For landlords who voluntarily increase rent by less than 5% (coexisting landlords), the capital gains tax exemption for one household one house and the two-year residency requirement necessary for the long-term holding special deduction will be completely waived." He also clarified the plan to ease the deadline for disposing of existing homes from the current 6 months to 2 years when obtaining a mortgage loan in regulated areas, and to abolish the obligation to move into a new home.

On the same day, Deputy Prime Minister Choo chaired the '1st Real Estate Related Ministers' Meeting' at the Government Seoul Office and announced, "The government intends to proactively respond to instability factors in the lease market in the second half of the year through tax, financial support, and supply expansion."

He assessed the current situation, saying, "Although the nationwide housing sales and lease markets, including the metropolitan area, have maintained stability due to the new government's efforts to normalize the real estate market and the trend of interest rate hikes, there are some short-term instability factors in the lease market. From August this year, lease contracts with rent increases of less than 5% under the two lease laws enacted two years ago will sequentially expire, and the seasonal demand in autumn overlaps, raising concerns about increased burdens on tenants preparing to move."

Deputy Prime Minister Choo said, "For low-income tenants whose renewal contracts expire, we will expand support for the deposit and loan limits of the Buttress Jeonse Loan, considering the rise in Jeonse prices over the past four years," and explained, "To alleviate the housing burden of monthly and Jeonse tenants, the monthly rent tax credit rate will be raised from a maximum of 12% to a maximum of 15%, and the income deduction limit for principal and interest repayments on Jeonse and monthly rent deposit loans will be expanded from 3 million won to 4 million won annually."

He also encouraged the expansion of private rental housing supply.

Deputy Prime Minister Choo stated, "In the case of mortgage loans in regulated areas, the deadline for disposing of existing homes will be eased from 6 months to 2 years," and added, "We will abolish the obligation to move into new homes to prevent the eviction of existing tenants during the home purchase process and to encourage the expansion of rental listings." He further said, "The actual residence requirement for the price ceiling system will be changed from the initial move-in date to the period before the transfer, inheritance, or donation of the house, so that the supply of Jeonse and monthly rent in newly built apartments can be expanded," and "We will also strengthen tax support to promote private construction rental supply."

Additionally, the housing price requirement for exemption from the additional 20% corporate tax on the transfer of rental housing will be raised from the current 600 million won to 900 million won. The special long-term holding deduction period for capital gains tax on construction rental housing leased for more than 10 years will be extended from the end of this year to the end of 2024.