Ryu Seong-geol "Principal Adjustment Limited"
"Private Rental Housing Capital Gains Tax Long-term Holding Special Deduction Exception Extended for 2 Years"
Ryu Seong-geol, Chairman of the People Power Party's Special Committee on Price and Livelihood Stabilization (Photo by Yonhap News)
[Asia Economy Reporter Kum Boryeong] As controversy over 'moral hazard' grows regarding the recent government policies for debt forgiveness for small business owners and youth, the People Power Party has stepped forward to clarify.
Ryu Seong-geol, chairman of the People Power Party's Special Committee on Price and Livelihood Stability, said on the 21st after the 8th Price Special Committee meeting at the National Assembly, "The Korea Asset Management Corporation (KAMCO)'s New Start Fund and the Credit Recovery Committee's proactive debt adjustment system for youth revival have been newly introduced. There were some misunderstandings related to this, so we focused on discussing those parts today and received an accurate report from the government."
Regarding the New Start Fund, Representative Ryu explained, "For debts held by insolvent marginal borrowers, the debtor's assets and income are thoroughly examined, and for borrowers judged to have almost no repayment ability, a certain portion of the principal is adjusted, and the repayment schedule and interest rate are also adjusted. I was informed that the principal adjustment is limited."
About the Credit Recovery Committee's proactive debt adjustment system, Ryu said, "It is an addition of a special program for youth to the already operating rapid debt adjustment program. It targets youth under 34 years old with credit scores in the bottom 20%, granting up to a 3-year grace period for principal and interest repayment, allowing equal installment repayment of principal and interest for up to 10 years, and applying an interest rate of 3.25% within the scope voluntarily agreed upon by the contracted financial institutions, so that youth can faithfully repay their debts and recover their credit," he explained.
He added, "This program is a Credit Recovery Committee's own program and does not involve government budget. It does not target those involved in debt-financed investment (debt investment) or all-in borrowing (borrowing to the limit for investment) as some controversies suggest. It is not a debt reduction program for all youth."
At the special committee meeting, two bills to amend the Restriction of Special Taxation Act were decided to be proposed. Representative Ryu said, "First, as an amendment to the Restriction of Special Taxation Act, the special deduction period for long-term holding of capital gains tax on private construction rental housing, which is set to expire at the end of this year, will be extended by two years."
He also said, "Next, the special tax treatment period for capital gains tax on land for the purpose of constructing public purchase rental housing is also set to expire at the end of this year, and we will propose an amendment to the Restriction of Special Taxation Act to extend the application period by an additional two years."
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