[Changes in the New Year] Reducing Real Estate Taxes for Multiple Homeowners, Easier Loans

Owners of Two Houses Subject to General Tax Rates in Adjustment Areas
Top Surtax Rate Reduced by 1%P for Those with Three or More Houses
Loan-to-Value Ratio for Multi-Homeowners in Regulated Areas Also Raised to 30%

[Asia Economy Sejong=Reporter Song Seungseop] From 2023, the real estate tax burden on multi-homeowners will be reduced. Real estate loan regulations and conditions will also be significantly eased.

From next year, two-homeowners will be subject to the general tax rate even in Seoul and other regulated areas. Until now, they have paid comprehensive real estate tax at a heavy tax rate. Although multi-homeowners originally refer to those owning three or more houses, in Korea, two-homeowners were also subject to regulations. For multi-homeowners with three or more houses, the highest heavy tax rate will be lowered from 6.0% to 5.0%. No heavy taxation will be applied for a taxable base under 1.2 billion KRW.

The “officially assessed price of 600 million KRW,” which was the basis for imposing the comprehensive real estate tax, will be raised to 900 million KRW. Single homeowners can receive a tax exemption benefit up to 1.2 billion KRW.

The exclusion measure for capital gains tax heavy taxation has been extended until May 9, 2024. Since May 10, temporary two-homeowners have been exempt from capital gains tax if they dispose of one house within two years. With the extension of this measure, two-homeowners disposing of a house next year will pay taxes at the general tax rate instead of the heavy tax rate (up to 82.5%). The government plans to first suspend the heavy capital gains tax and prepare a reform plan.

The carryover taxation period for capital gains tax will be extended from 5 years to 10 years. If real estate gifted to a spouse or direct ascendants/descendants is transferred within 10 years, the acquisition price will be calculated based on the acquirer's acquisition price, not the gift price.

The “2 million KRW acquisition tax exemption” policy applied to first-time homebuyers has removed its conditions. Previously, the acquisition tax exemption required income conditions (below 70 million KRW) and price conditions (400 million KRW in the metropolitan area, 300 million KRW outside). From next year, anyone can enjoy the exemption benefit.

In the first quarter, a special Bogeumjari Loan will be introduced. The special Bogeumjari Loan is a policy financial product that integrates the Safe Conversion Loan, Qualified Loan, and Bogeumjari Loan. It is characterized by not distinguishing whether the house is newly purchased or refinanced. The benefit will increase with a house price limit of 900 million KRW and a loan limit of 500 million KRW, and income requirements will be removed.

The loan-to-value ratio (LTV) for multi-homeowners, currently capped at 0% in regulated areas, will be eased to 30% within the first quarter. Multi-homeowners will be able to receive mortgage loans in all areas of Seoul and regulated real estate areas within the metropolitan area. The loan limit for mortgage loans aimed at living stability and rental deposit return (200 million KRW) will be abolished. With mortgage loans now possible for high-priced apartments over 1.5 billion KRW, loans for rental deposit returns will become available.