Exemption from Comprehensive Real Estate and Capital Gains Taxes for Second Home Purchases in Depopulated Areas... People Power Party's Lee Dalhee Proposes Bill

Lee Dalhee, a proportional representative of the People Power Party, announced on the 2nd that she has proposed her 'first bill,' which includes amendments to the 'Restriction of Special Taxation Act' and the 'Comprehensive Real Estate Tax Act.' The bills aim to resolve regional population imbalances by encouraging inflow of residents into areas experiencing population decline.

The amendments stipulate that if someone purchases a second home in a population-declining area?where regional extinction is a concern?and resides there on weekends or holidays, the property will be excluded from the taxable housing count for both the comprehensive real estate tax and capital gains tax.

People Power Party Lee Dalhee

This measure is intended to strengthen local economies by increasing the living population in regions suffering from rapid depopulation, rising numbers of vacant homes, and severe community hollowing, as well as by boosting asset values through revitalized real estate transactions.

According to the Ministry of Economy and Finance, South Korea's population has been declining since 2021, and the imbalance between the capital region and local areas is intensifying the risk of regional extinction.

In particular, as the population decline in local areas accelerates, problems such as an increase in vacant homes and labor shortages are worsening the economic hollowing of these regions, resulting in a vicious cycle of further population decrease.

Recently, the government responded to the risk of regional extinction by amending the 'Special Act on Balanced National Development' in 2021, designating 89 cities, counties, and districts as population-declining areas. Since the inauguration of the Yoon Suk-yeol administration, the 'Special Act on Support for Population-Declining Areas' has been fully implemented in 2023, providing a support framework. However, there have still been criticisms that these measures are limited in their ability to promote population inflow into such areas.

The amendments to the 'Restriction of Special Taxation Act' and the 'Comprehensive Real Estate Tax Act' proposed by Lee Dalhee stipulate that if a current single-home owner acquires an additional home in a population-declining area, the special tax benefit for single-home households will apply to capital gains tax, and the property in the population-declining area will not be included in the taxable standard for the comprehensive real estate tax.

If these amendments pass the National Assembly, it is expected that the tax burden for purchasing homes in population-declining areas will be reduced, thereby encouraging more people to share their living spheres with these regions.

Meanwhile, Lee Dalhee has reportedly prepared these amendments while serving as a member of the People Power Party's Special Committee on Tax Reform, showing keen interest in tax reforms to support population-declining areas.

Lee Dalhee stated, "The extinction of local areas due to population decline is an urgent national issue that must be addressed first and foremost for balanced national development. Since my time as Vice Governor for Economic Affairs of North Gyeongsang Province, I have been deeply committed to realizing a happy era for local regions," adding, "I will continue to work towards creating an era where people can live happily anywhere in Korea."