S. Korea to hike tax burden for multiple homeowners

Jul 10, 2020, 09:30 am

		0
A view of Daechi-dong from the summit of Daemosan on July 8, 2020./ Source: Yonhap

AsiaToday reporter Lim Yoo-jin

The South Korean government and ruling Democratic Party (DP) will announce anti-speculation measures centered on raising the comprehensive real estate holding tax for multiple homeowners on Friday. They are reportedly planning to nearly double the rate cap from the current 3.2 percent to 6 percent, which could bring about a significant impact on the real estate market.

According to DP sources on Thursday, the government and the ruling party are making a last-minute decision on a series of measures related to acquisition tax, comprehensive real estate holding tax, and transfer income tax. They are planning to come up with the tough measures on Friday in order to curb soaring housing prices, but it is expected to take time to adjust the details since the measures would leave a huge blow for the real estate market.

The announcement of the measures has been outlined, but specific details are not decided yet. It is said that the newest real estate package will include comprehensive real estate tax increase on multiple homeowners, which will be tougher than the previous real estate package announced last December. The measure will be lowering the property value baseline for tax rates or introducing a new tax bracket to increase the burden for multiple homeowners.

The government is unlikely to adopt a plan to significantly reduce the basic tax reduction of comprehensive real estate tax for multiple homeowners from the current 600 million won. Instead, it plans to improve the overall comprehensive real estate tax credit system, including tax benefits for single homeowners that possess their property for a long time.

The final decision is drawing attention as the government and the ruling party are reviewing a plan to reduce or abolish tax benefits for registered rental business operators. They are considering introducing a differentiated approach for different types of homeowners. For instance, they will increase tax burden for multiple homeowners while providing tax and financial benefits for single homeowners.

In addition, the government and the ruling party are preparing concrete plans to include measures to strengthen capital gains tax burden on short-term housing sales in a bill to revise the Income Tax Law. Last December, the government had announced a measure that to increase the transfer tax rate for houses possessed for less than a year to 50 percent, and apply a 40 percent transfer tax rate for houses possessed for less than two years. However, the government is considering raising the tax rate even more this time.

#South Korea #tax burden #multiple homeowners #comprehensive real estate holding tax