[2024 Local Tax Law Amendment] Is the Acquisition Tax Reduction for Population Declining Areas Applicable Concurrently with the 'First-Time in Life' Reduction?

[Q&A] Acquisition Tax Reduction Benefits, Under the Special Tax Treatment Control Act
If Overlapping, Apply the Larger Tax Reduction Rule
Most Amendments to be Uniformly Applied from January 1 Next Year

The government announced on the 13th this year's local tax reduction plan to promote regional balanced development and stabilize people’s livelihoods. In depopulated areas, acquisition tax will be reduced even when purchasing so-called 'second houses,' and acquisition tax reductions for multi-child families on automobiles will also be expanded. Among various benefits, ambiguous applications of reductions or parts that have materially changed from the past have been collected and organized in detail.

What is the reason for newly establishing acquisition tax reductions for non-homeowners or single-homeowners in depopulated areas?

It is to promote the influx of resident population and revitalize the local economy in areas at risk of population extinction. Earlier, in the depopulated area revitalization plan announced in April, a support measure was prepared to apply the single-home special case when calculating property tax, comprehensive real estate tax, and capital gains tax even if additional houses are acquired in depopulated areas.

Can the first-time homebuyer tax reduction and the acquisition tax reduction in depopulated areas be applied simultaneously?

If the two reductions overlap, according to current law, the regulation with the larger tax reduction amount favorable to the taxpayer will be applied. If a non-homeowner purchases their first home and receives an acquisition tax reduction, and then purchases one home as a 'second home' in a depopulated area, the reductions are applied sequentially.

For houses in depopulated areas, the target is non-homeowners or single-homeowners, with acquisition price up to 300 million KRW, and the reduction rate is 50% (up to 1.5 million KRW). The first-time homebuyer reduction targets non-homeowners with no home ownership, for houses priced up to 1.2 billion KRW. The reduction rate is 100% (up to 2 million KRW), and there is no regional restriction.

Is there a difference in automobile acquisition tax reduction amounts between families with two children and those with three or more?

For families with two children, a 50% reduction is applied, not full. Previously, only families with three or more children received a 100% acquisition tax reduction benefit, but now the benefit has been expanded to families with two children as well. For passenger cars with up to six seats, the reduction limit is 700,000 KRW for two-child families and 1.4 million KRW for families with three or more children. The government increased the reduction targets considering the trend across the government to relax the multi-child standard from three children to two children in areas such as public housing multi-child special supply, elementary after-school care, and cultural facility discounts.

How has the acquisition tax and property tax reduction for workplace daycare centers changed compared to before?

Previously, only business owners with installation obligations received local tax reductions (50% acquisition tax, 100% property tax) on real estate acquired for entrusted operation of daycare centers, not all workplace daycare centers. From now on, regardless of installation obligation, 100% acquisition tax and 100% property tax reductions will be applied to all real estate acquired for the purpose of entrusted operation of workplace daycare centers. The intention is to create an environment where companies and society jointly support childcare.

Why is the local tax reduction for seismic reinforcement buildings being expanded?

As the importance of seismic reinforcement grows in preparation for earthquakes, the seismic reinforcement rate of private buildings is very low at 16.7%, compared to 78.1% for public buildings. The government judged that tax support is necessary to emphasize the importance of seismic reinforcement and to create an environment encouraging voluntary participation in seismic reinforcement among buildings not subject to mandatory seismic reinforcement.

The government decided that even buildings not subject to mandatory structural safety confirmation for earthquake damage, if they have undergone seismic performance confirmation under the 'Earthquake Countermeasures Act,' can deduct the seismic reinforcement costs from the acquisition tax base and receive a 50% property tax reduction for five years. Also, the reduction for earthquake-safe certified buildings currently only available through new construction will be improved to apply also through extensions and major renovations.

When will the local tax reduction benefits announced this time be applied?

The local tax-related law amendments announced on this day will be publicly notified from the next day until September 9, and then submitted to the National Assembly in early October. If the bills pass, most regulations will be uniformly applied from January 1 of next year. However, some matters may have special cases such as retroactive application according to the supplementary provisions.