Acquisition Tax Discount for Purchasing Newly Built Small or Unsold Apartments in Provinces

Enforcement of Amendments to Enforcement Decrees and Rules Including the "Local Tax Basic Act"
Small New Buildings: 60㎡ or Less, Non-Apartment Under 600 Million KRW in the Metropolitan Area
Unsold Apartments: 85㎡ or Less, Acquisition Price Under 600 Million KRW

The government has decided to reduce the acquisition tax burden when purchasing small housing units (non-apartment) under 60㎡ or unsold apartments in local areas. This measure aims to lower the burden of purchasing and owning homes and to promote the supply of various small housing units used for rental purposes. The long-term goal is to stabilize the jeonse (long-term lease) market.

On the 19th, the Ministry of the Interior and Safety announced that the amendments to the Enforcement Decree and Enforcement Rules of the 'Local Tax Basic Act,' 'Local Tax Collection Act,' and 'Local Tax Act,' which include these provisions, were approved at the Cabinet meeting and will be implemented immediately from the 26th.

First, when newly acquiring small housing units or unsold apartments in local areas, these houses will be excluded from the count of houses when calculating acquisition tax. Currently, the acquisition tax rate varies depending on the number of houses per household, but when purchasing such small housing units, the acquisition tax rate will be applied based on the number of houses previously owned, thus reducing the acquisition tax burden compared to before.

The applicable small housing units are multi-family houses, multi-unit houses, row houses, urban lifestyle housing, and residential officetels with a net floor area of 60㎡ or less and an acquisition price of 600 million KRW or less in the metropolitan area, and 300 million KRW or less in other regions. To support the recovery of the construction industry in local areas, unsold apartments completed in local areas that are first acquired by individuals from January 10, 2024, to December 31, 2025, will also be excluded from the house count. The applicable unsold apartments are those in local areas with a net floor area of 85㎡ or less and an acquisition price of 600 million KRW or less.

For example, if an existing single homeowner (individual) first acquires one newly built small house (300 million KRW) in a local area in May 2024 and another one (300 million KRW) in August 2024, the acquisition tax rate for a single homeowner (1% for houses under 600 million KRW) will be applied equally at each acquisition point for the newly built small houses.

Additionally, reflecting changes in social perceptions of relatives and the prevalence of nuclear families, the scope of relatives among special related parties under tax law will be rationally adjusted. Previously, the scope of relatives among special related parties included blood relatives within six degrees and relatives by marriage within four degrees, but with this amendment, the scope of relatives will be reduced to blood relatives within four degrees and relatives by marriage within three degrees.

To strengthen basic living security for low-income tax delinquents, the standard amount for deposits and wages exempt from seizure in local tax arrears will be relaxed from '1.85 million KRW' to '2.5 million KRW.' The seizure exemption standard for death insurance benefits and surrender/maturity refunds of guaranteed insurance was also adjusted from 1.5 million KRW to 2.5 million KRW. Furthermore, to ease the temporary financial burden on public auction buyers, the scope of applicants for the public auction purchase price differential payment system is specifically defined as those holding mortgage rights, jeonse rights, provisional registration security rights, tenant rights with opposability, and registered tenant rights.

Minister Lee Sang-min stated, "I hope this amendment will serve as an opportunity to revitalize the supply of small housing units, which have been stagnant, and to recover the construction industry in local areas." He added, "We will continue to improve the local tax system to contribute to regional economic revitalization and the stabilization of ordinary citizens' lives."