[Practical Finance] This Year’s Changes in Subscription, Taxes, and Reconstruction

Expansion of Special Supply for Newlyweds and Newborns... Increased Chances of Winning
Tax Benefits for Rental Businesses... 100 Villas Still Count as One Home
Apartments Over 30 Years Old Eligible for Reconstruction Without Safety Inspections

In 2025, housing and real estate-related systems will undergo major reforms. The subscription system will be revised to favor those without homes, and tax benefits for rental business operators will be significantly strengthened. Accordingly, strategies for actual demanders and investors are also expected to change.

Increased Chances for Newlyweds to Win... 'Jupjup' Not Allowed if You Own a House

The biggest change in the subscription system is the increase in the priority supply ratio for newborns and newlyweds as part of the government's low birthrate countermeasures. The special supply ratio for newlyweds will expand from the existing 18% to 23%. Among this, the priority supply ratio for newborns will be raised from 20% to 35%. Additionally, prospective couples or newlyweds will be able to apply for the special supply for newlyweds even if their spouse has a history of winning a subscription before marriage. The revised subscription system is expected to be implemented as early as this month.

Younger adults aged 19 to 34 without homes should also consider the Youth Housing Dream Loan. This product offers loans up to 80% of the sale price at a minimum interest rate of 2.2%. The target is those with an annual income of 70 million KRW or less (combined income of a couple up to 100 million KRW). Along with this, the supply of 'Youth Hope Dream Housing' with various convenience facilities in locations near subway stations and workplaces will be promoted. Furthermore, the deductible limit for payments applied to the housing subscription savings has been raised from the existing 2.4 million KRW per year to 3 million KRW. This benefit is available to household heads without homes with an annual income of 70 million KRW or less, regardless of age.

Also, the non-priority subscription system, known as 'Jupjup,' will be revised. Although specific details have not yet been released, a strong proposal is emerging to prohibit homeowners and residents from other regions from participating in non-priority subscriptions. The government previously restricted non-priority subscription eligibility to 'homeless residents of the relevant area,' but had successively removed residence and home ownership restrictions. If the system is revised, the chances of winning for actual demanders without homes will increase. In addition, people who own one villa with a floor area of 85㎡ or less and a publicly announced price of 500 million KRW or less in the metropolitan area will also be recognized as homeless when applying for apartment subscriptions.

Special One-Home Exception Even if Owning 100 Villas

It is also important to carefully review the changes in real estate-related taxes this year. First, the deferral period for the capital gains tax surcharge on multi-homeowners in regulated areas has been extended by one year until May 2026. If the house is sold within this period, the surcharge tax rate will not apply. Additionally, for houses or post-construction pre-sale houses acquired in depopulated areas between January 4, 2024, and December 31, 2026, the special one-home exception applies. Capital gains tax and comprehensive real estate tax are each deductible up to 1.2 billion KRW.

Moreover, the publicly announced price standard for low-priced local houses eligible for the one-home exception in comprehensive real estate tax calculations has been raised from the current 300 million KRW to 400 million KRW. Furthermore, with the revival of the short-term registered rental system, related tax systems will be revised. If the mandatory rental period of six years is fulfilled, benefits such as general acquisition tax, exclusion from comprehensive real estate tax aggregation, exemption from capital gains tax surcharge, and non-taxation of residential housing will be granted. This means that even if you own 100 villas for rental business, you can receive the one-home benefit. Apartments are excluded from registration.

Lower Prepayment Fees on Mortgage Loans... Reduced Threshold for Reconstruction

Additionally, the burden on homeowners who repay mortgage loans early has been reduced. As the government implements the revision of prepayment fees on mortgage loans, the average prepayment fee for fixed-rate loans has been lowered from 1.4% to 0.65%. For variable-rate loans, the average prepayment fee has decreased from 1.2% to 0.65%. The fee burden has dropped to about half. For example, if you prepay a loan of 150 million KRW, the fee decreases from the previous 1.8 million KRW (variable rate) to 2.1 million KRW (fixed rate) range down to 975,000 KRW.

Starting in June, apartments over 30 years old can undergo reconstruction even without passing safety inspections. Previously, a D grade or lower was required in the safety inspection to acknowledge risk. Also, reconstruction promotion committees can now be formed before the designation of redevelopment zones. Furthermore, during reconstruction and redevelopment processes, resident consent required for the establishment of promotion committees or associations can be obtained electronically instead of in writing.