Selling inherited house in 2 years reduces comprehensive real estate tax burden

Jan 07, 2022, 09:30 am

		0
Kim Tae-joo, head of the tax department of the Ministry of Economy and Finance, is announcing the Revision of Enforcement Decree following Tax Law Revision during a briefing held at the government complex in Sejong on Jan. 4, 2022./ Source: The Ministry Economy and Finance

AsiaToday reporter Lee Ji-hoon

If you inherit a house due to the sudden death of your parents and become an owner of two homes, you can reduce the comprehensive real estate tax burden by selling the inherited house within up to three years.

The Ministry of Economy and Finance announced the ‘Amendment to the Enforcement Decree following the Tax Law Amendment 2021’ on Thursday.

Under the enforcement decree of the tax act, the government has decided to lower the comprehensive real estate tax burden on the inherited home of single homeowners. The move is aimed at preventing a sudden increase in the tax burden due to unexpected inheritance. Currently, the comprehensive real estate tax rate for single homeowners stands at 0.6 to 3.0 percent, while the rate for multiple homeowners owning two or more houses in areas designated for adjustment stands at 1.2 to 6.0 percent.

In the case of single homeowners, the government decided to exclude the inherited house from the number of houses when applying the comprehensive real estate tax for 2 years in the greater Seoul area, special self-governing city, metropolitan cities, and 3 years in other regions from the date of commencement of inheritance. During this period, the government plans to imply lower tax rate that is applied to single-homeowners instead of heavy tax applied to multi-homeowners. However, it will maintain the method of adding the inherited housing to the tax base.

“Considering that an inherited house is held unexpectedly regardless of the owner’s will, the deadline for reporting inheritance tax, the inheritance procedure and the period required to dispose the house, it is granted for the minimum period of two years,” an official from the ministry said. “We offered an additional grace period of one year for some regions as it may take longer to dispose of a house.”

For example, if a person ‘A’, who owns a house with declared value of 1 billion won in the greater Seoul area, inherits a house with declared value of 600 million won due to his father’s death, ‘A’ needs to pay 18.33 million won when inherited. However, under the amendment, A gets to pay only 8.49 million won for comprehensive real estate tax if he sells the inherited house within two years.

#inheritance #comprehensive real estate tax