On the 9th, the Local Tax Special Cases Restriction Act Amendment Bill was processed at the Public Administration and Security Committee's Bill Review Subcommittee 1
[Asia Economy Reporter Oh Ju-yeon] The Yoon Seok-yeol administration's first real estate policy announced in June last year, 'Exemption of acquisition tax up to 2 million won for first-time homebuyers,' is finally expected to pass in the February extraordinary session of the National Assembly. Although difficulties in passing the bill were anticipated beyond last year, the ruling and opposition parties have started coordinating opinions in the National Assembly's standing committee, raising expectations that the bill will clear the National Assembly hurdle after about eight months.
According to political circles on the 9th, at the National Assembly's Public Administration and Security Committee's Bill Review Subcommittee 1 meeting held that day, the ruling and opposition parties processed the 'Local Tax Special Cases Restriction Act Amendment' which includes the provision to exempt acquisition tax up to 2 million won regardless of income for first-time homebuyers. Following the agreement between the ruling and opposition parties the previous day, the subcommittee's approval proceeded smoothly.
The amendment still faces hurdles in the full meeting of the Public Administration and Security Committee, the Legislation and Judiciary Committee, and the plenary session. Kim Gyo-heung, the opposition party's secretary and a member of the Democratic Party of Korea, serves as the chair of Bill Review Subcommittee 1 and led the agreement two days prior. Lee Man-hee, the ruling party's secretary and a member of the People Power Party, also said in a phone interview with Asia Economy on the same day, "There will be no disagreements," increasing the likelihood of passage within the February extraordinary session.
Lee said on the day, "Originally, the 2 million won limit was to be applied regardless of housing price, but through discussions between the ruling and opposition parties in the subcommittee, it was agreed to provide a tax reduction up to 2 million won without income restrictions for houses priced below 1.2 billion won based on the comprehensive real estate tax (종부세) standard." He added, "(The current acquisition tax reduction housing price criteria) apply only when the price is below 400 million won in the metropolitan area and 300 million won in non-metropolitan areas, which was somewhat complicated, but since the intention is to broaden the beneficiaries, it is seen as a step forward compared to the existing reduction conditions." The removal of income restrictions and exclusion only of high-priced houses is interpreted as the best compromise the ruling and opposition parties could reach. It is expected that the amendment to the Local Tax Special Cases Restriction Act will pass without major difficulties in the upcoming full meeting of the Public Administration and Security Committee.
In June last year, Deputy Prime Minister and Minister of Economy and Finance Choo Kyung-ho announced at the '1st Real Estate Related Ministers' Meeting' a policy to exempt acquisition tax up to 2 million won for first-time homebuyers regardless of annual income or housing price. Previously, the benefit was available only if the combined annual income of the couple was below 70 million won and the house price was below 400 million won in the metropolitan area or 300 million won in non-metropolitan areas, but these criteria were removed to expand the beneficiary pool. Accordingly, the number of beneficiaries was expected to more than double from 123,000 households annually to 256,000 households. The policy was to apply retroactively to houses purchased after the announcement date (June 21). The current amendment largely maintains the framework announced by the government last year but modifies the housing price criteria through ruling and opposition party discussions, reflecting the Democratic Party's demand to exclude high-priced houses.
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