Committee narrows tax exemption for home sales

Buyers of homes worth less than 600 million won ($536,200) or smaller than 85 square meters (914.9 square feet) will be exempt from capital gains tax under a plan proposed by the Ministry of Strategy and Finance.

Though not yet accepted by the National Assembly, the exemption was approved by the Strategy and Finance Committee yesterday and is expected to pass a full vote on Monday. The new exemption will apply to sales of new and existing homes starting yesterday and will last for five years. The government previously proposed a capital gains tax exemption for sales of homes priced 900 million won or less in the April 1 property market normalization plan, but the new deal reduces the number of eligible homes. The capital gains tax currently stands at 38 percent for homes priced over 300 million won. The news brought expectations that sales of small homes would increase.

“The revised measure will still help boost the market as small apartments that are going to be renovated in the Gangnam area will be subject to the measure,” said Choi Sang-hoon, a realtor in Banpo-dong, southern Seoul. Still, some expressed disappointment that owners of larger houses wouldn’t benefit from the government plan.

“There will be many fewer apartments exempted from the tax, so the plan will ultimately have a limited impact on the market,” said an executive at a major construction company. “It is quite disappointing to hear the news.”

By Song Su-hyun [ssh@joongang.co.kr]