[2023 Economic Policy] Acquisition Tax Surcharge for Multi-Homeowners to Be Eased

Acquisition Tax Reduction Also Implemented for Apartment Sales to Rental Business Operators

[Image source=Yonhap News]

[Asia Economy Reporter Kiho Sung] The Ministry of the Interior and Safety announced on the 21st that it will ease the acquisition tax surcharge on multi-homeowners.

The acquisition tax surcharge system for multi-homeowners was introduced in August 2020 to curb housing speculation. However, it faced criticism for being excessive, with the highest tax rate reaching 12%, and there were concerns about the system's relevance amid recent economic downturns and sluggish housing transactions, as it was originally implemented during a period of overheated housing markets.

Accordingly, as part of the government's "real estate tax system normalization," the surcharge will be abolished for up to two homes, and for those owning three or more homes, the current surcharge rate will be reduced by 50%.

The government stated that even by abolishing the acquisition tax surcharge only for owners of up to two homes, most households will be subject to the general tax rate rather than the surcharge rate.

The effective date of this measure is from the day of the surcharge easing announcement, and it applies to homes whose final payment date is on or after this day.

However, since the easing of the acquisition tax surcharge requires a legal amendment, the government plans to apply it retroactively from this day when the amendment to the "Local Tax Act" is legislated in the National Assembly early next year (expected in February).

In addition, along with the easing of the acquisition tax surcharge, the government plans to reduce the gift acquisition tax surcharge rate on homes worth 300 million KRW or more in designated adjustment areas from the current 12% to 6%.

Meanwhile, as the government plans to resume rental registration for long-term apartments of national housing size (exclusive area of 85㎡ or less), local tax benefits related to this will also be restored. The implementation will begin from the time the "Special Act on Private Rental Housing" is amended and enforced.

Minister of the Interior and Safety Sangmin Lee stated, "I hope this easing of the acquisition tax surcharge will alleviate the excessive tax burden and help normalize the sluggish housing transactions," adding, "We will continue to pursue tax reforms that support stable housing for ordinary citizens in the future."