'Population Decline' Cities Also Eligible for Rural Transfer Tax Special Cases on Housing... Exemption Applied

[Asia Economy Sejong=Reporter Kim Hyewon] The government is considering allowing special capital gains tax exemptions on housing in cities experiencing population decline, not just in rural fishing villages. Areas designated as enterprise cities under the Special Act on Enterprise City Development, such as Taean in Chungnam and Haenam in Jeonnam, which are experiencing population decline, are strong candidates.

According to the Ministry of Economy and Finance on the 27th, an amendment to the Restriction of Special Taxation Act, which establishes new target areas for applying special capital gains tax exemptions on rural housing in urban areas, passed the National Assembly on the 23rd.

Currently, only houses located in rural fishing villages are eligible for capital gains tax benefits, but going forward, some urban areas will be added as special exemption targets. The additional special exemption areas are expected to be designated through a comprehensive evaluation of real estate price trends and the severity of enterprise cities among population-declining regions.

In particular, it is reported that the target areas are likely to come from the constituencies of Representative Seong Iljong of the People Power Party (Seosan City and Taean County, Chungnam) and Representative Yoon Jaegab of the Democratic Party (Haenam, Wando, and Jindo Counties, Jeonnam), who proposed the bill. A Ministry of Economy and Finance official said, "The specific target areas and benefits will be decided through amendments to the Restriction of Special Taxation Act and other tax law enforcement ordinances early next year."

The special capital gains tax exemption for rural fishing village housing is a system that excludes rural housing from the number of houses owned when a household owns one general house and one rural fishing village house for tax purposes. In this case, the taxpayer becomes a one-household one-house owner under tax law, so if certain conditions are met, they can receive capital gains tax exemption benefits.

For example, if Mr. A, who owns one house in Seoul, additionally acquires one house in a rural fishing village and holds it for more than three years, Mr. A can receive a non-taxation benefit when transferring the existing house. When disposing of the remaining rural fishing village house, if the three-year holding requirement is met, non-taxation can be applied again. After the amendment to the enforcement ordinance, urban houses in population-declining areas will enjoy similar benefits.