If You Sell Your House Within 3 Years, 'Temporary Two-Home' Benefit... Choo: "Proactively Resolving Difficulties" (Comprehensive)

Emergency Economic Ministers' Meeting at Government Seoul Office on the 12th
Deadline for Disposal of Previous Residence for Second Homeowners Extended from 2 Years to 3 Years

[Asia Economy Sejong=Reporter Song Seung-seop] From now on, within three years, homeowners who sell their existing house can qualify for the temporary two-home ownership special exemption. This measure will be applied starting January 12. As the number of homeowners who find it difficult to sell their houses due to the real estate market downturn has increased, and voices criticizing the unfairness of real estate tax policies have grown louder, the government has decided to ease the requirements.

On the 12th, the government held an emergency economic ministers' meeting at the Government Seoul Office, chaired by Deputy Prime Minister and Minister of Economy and Finance Choo Kyung-ho, to discuss supplementary measures for real estate taxation. According to the plan, the 'disposal period for the previous house' to qualify for the temporary two-home ownership special exemption will be extended from two years to three years. Although the implementation will begin next month in February, capital gains tax and acquisition tax will be applied retroactively from January 12, and comprehensive real estate tax will be applied from the tax obligation establishment this year. However, in the case of the comprehensive real estate tax, those who applied for the temporary two-home ownership special exemption last year are also subject to this measure.

Deputy Prime Minister and Minister of Economy and Finance Choo Kyung-ho delivering opening remarks at the Emergency Economic Ministers' Meeting held at the Government Seoul Office Building on the 12th

Eligible homeowners can receive capital gains tax benefits such as one household one home non-taxation and a long-term holding special deduction of up to 80%. In designated adjustment areas, when paying acquisition tax, the two-home ownership surtax rate (8%) will not be applied, and the general tax rate (1-3%) will be applied instead. For government taxes, a basic deduction of 1.2 billion KRW and elderly/long-term holding tax credits of up to 80% will be provided. To this end, the government will begin revising the Enforcement Decree of the Income Tax Act, the Local Tax Act, and the Comprehensive Real Estate Tax Act next month.

Temporary two-home owners refer to those who owned one home per household but temporarily became two-home owners by acquiring a new house due to moving, etc. The government has provided tax benefits if the previous house is disposed of within a certain period, judging that the purpose is more for actual demand rather than speculation.

However, recently, among temporary two-home owners, complaints have been widespread that it is difficult to dispose of houses due to rising base interest rates and a decrease in overall housing market transactions. In particular, there have been many criticisms that the recently announced tax benefits are unfair. For cases where a new multi-home owner is created through tax law amendments, acquisition tax surcharges are eased even in designated adjustment areas, but if the balance payment has already been made and the house is not sold within the deadline, the surcharge is applied.

Deputy Prime Minister Choo Kyung-ho explained, "As the sluggishness in real estate market transactions has prolonged, concerns have continued to spread that despite a clear intention to sell the previous house, it may not be disposed of within two years. We have decided to extend the disposal period for the previous house to three years regardless of the region so that those who temporarily became two-home owners among one-home actual demanders do not suffer excessive difficulties."

He added, "To prevent listings from being frozen from the announcement date to the implementation date and to promptly provide benefits to temporary two-home owners, we will apply the measures retroactively from today. Going forward, we will closely monitor real estate prices and transaction trends and proactively resolve difficulties faced by actual housing demanders and vulnerable groups."