Yoon calls for abolishing punitive tax on multiple-property owners

Economy

Published: 10 Jan. 2024, 13:01 Updated: 10 Jan. 2024, 18:47

Yoon calls for abolishing punitive tax on multiple-property owners

President Yoon Suk Yeol speaks during a government policy debate in Goyang, Gyeonggi, on Wednesday. [JOINT PRESS CORPS]

President Yoon Suk Yeol called for abolishing the punitive tax levied on homeowners with multiple properties on Wednesday, which would be the latest in a string of tax relaxations for property owners.

The Yoon administration has been pushing to eliminate or lower the additional tax rates from acquisition, capital gains and real estate taxes for multi-home ownership.

The plan, however, could further reduce already dwindling government tax revenue and lead to political repercussions from the main opposition Democratic Party.

“[The government] will overhaul regulations targeting multiple-home owners,” Yoon said during a policy forum in Goyang, Gyeonggi on Wednesday.

“The regulation labels the owners as immoral and the culprit behind rising real estate prices, penalizing them with higher tax rates. But the approach could pass the burden to those who rent,” he said.

The relaxation will first apply to owners of newly built non-apartments that measure less than 60 square meters (645 square feet) and were purchased for less than 600 million won ($453,559). These acquisitions will not be taxed as property.

If a homeowner buys a residence that falls into the category, they will still be taxed as a single-home owner when it comes to acquisition, capital gains and real estate taxes for the next two years.

The buyer of a property type that finishes construction between Jan. 10 of this year and Dec. 31 of 2025 will be entitled to a 50 percent reduction to their acquisition taxes.

The decision comes amid a property market that is mostly frozen, especially when it comes to the sales of non-apartment buildings such as villas, detached houses and officetels.

The president also pledged to waive safety assessments for redeveloping and reconstructing homes more than 30 years old.

The safety inspection has been a bottleneck for the redevelopment of old apartments, as only complexes rated between D and E can proceed with the process.

“The government will respect the market and execution of ownership, stripping the real estate market from political ideology,” Yoon said.

The exemption could shorten the redevelopment procedure by around three years.

The Land Minister said at the forum that the government will expand the supply of public housing this year by designating new development sites to build more than 140,000 units, expanding its initial vow of 125,000 units.

To increase the supply, the ministry will lift development its restrictions on areas designated as “green belt” for environmental purposes and will utilize unused land in Seoul and the Gyeonggi metropolitan area.

The combination of measures represents a complete shift in direction from the former Moon Jae-in administration, which first introduced the scaled levying of property taxes for owners of multiple homes.

It bumped up its acquisition tax rate to 8 percent in 2020 for people who own two homes and to 12 percent for those with even more properties. The Yoon administration tried to introduce a bill to eliminate the taxes for people with two houses, but the attempt fell through due to opposition from the Democratic Party.

BY PARK EUN-JEE [park.eunjee@joongang.co.kr]