“Significant relaxation of real estate regulations,” even tax reduction for the first purchase of local ‘unsold after completion’ homes and ‘elimination of heavy taxation for multiple homeowners’

When purchasing an unsold local house for the first time, it is excluded from the number of houses when calculating tax
As of November last year, 11% of all unsold homes are expected to receive benefits
‘Abolition of heavy taxation for multiple homeowners’ is also being promoted to promote recovery in real estate and the overall domestic economy
President Yoon Seok-yeol is speaking at a public livelihood debate with the people held on the 10th at Goyang Aram Nuri, Ilsandong-gu, Goyang-si, Gyeonggi-do, under the theme of ‘Housing that the people want’/Photo = Presidential Office Photojournalist Group

The government has decided to provide a tax reduction for the first purchase of an unsold home after completion in a non-metropolitan area by the end of 2025. This is to prevent a sharp downturn in the real estate market by improving local business conditions, including the rapidly increasing problem of unsold units. In addition, the government has decided to push for the abolition of heavy taxation on those who own multiple homes. This is interpreted as an intention to increase housing supply through measures to normalize demand and to stabilize the real estate market as well as revitalize the domestic economy.

Ministry of Land, Infrastructure and Transport announces ‘Measures to expand housing supply and supplement construction economy’

According to the ‘Plan to expand housing supply and supplement the construction economy to stabilize the national housing’ announced by the Ministry of Land, Infrastructure and Transport on the 10th, if an unsold house is purchased for the first time after completion in a local area for two years from this day to December 12 of next year, acquisition tax, transfer tax, You can receive the benefit of excluding the number of houses in the calculation process, such as comprehensive real estate tax. The plan is to provide an overall tax reduction by applying a property tax rate lowered by 31%p as for single-home owners and at the same time providing a basic deduction of up to 2 billion won in comprehensive real estate tax.

To this end, the government plans to revise the enforcement ordinance related to housing exclusion in May and apply it retroactively from the 5th of this month. The target houses are those with an exclusive area of ​​10 m85 or less and an acquisition price of 6 million won or less. According to the Ministry of Land, Infrastructure and Transport, as of November last year, among the unsold homes after completion in local areas, 11% of the houses were exclusive use of 85㎡ or less, and it is expected that most houses will benefit.

It has been decided to temporarily reduce original acquisition tax by up to 50% for one year even if a housing business uses an unsold house as a rental house after completion of local construction. Eligible for the reduction are unsold houses with an acquisition price of 1 million won or less and an exclusive use area of ​​1 m12 or less that are completed between January and December of this year and for which a rental contract for more than 3 years is concluded by December. The Ministry of Land, Infrastructure and Transport decided to first pursue this policy by revising the Special Local Tax Restriction Act.

In addition, the purchase of unsold homes from Korea Land and Housing Corporation (LH) will also be promoted. An official from the Ministry of Land, Infrastructure and Transport said, “Depending on the trend of unsold units, we plan to use them as purchased rental housing for LH, taking into consideration construction companies’ self-rescue efforts such as sale price discounts and rental demand,” and added, “The extent of self-rescue efforts and purchase quantity will be determined later in consideration of market conditions.” “It is,” he said.

The reason the government came up with this measure is because the number of unsold units is increasing, especially in rural areas. According to the Korea Research Institute for Human Settlements, as of the end of November last year, the total number of unsold homes nationwide was 11, showing a downward trend since reaching a peak in February. However, the number of unsold homes after completion stands at 5, showing no signs of increase. Unsold units after completion are classified as ‘malicious unsold units’ as they are units that have not been sold continuously for 7,925 to 2 years after completion. If unsold units accumulate like this, local construction companies may fall into a liquidity crisis, which is likely to have a negative impact on related banks and the financial system as a whole.

Panoramic view of downtown Seoul/Photo = Getty Image Bank

President Yoon said, “We must abolish heavy taxation on people who own multiple homes so that the common people can benefit”

The government has decided to push for the abolition of heavy taxation on those who own multiple homes. President Yoon Seok-yeol criticized the problems with heavy taxation in his opening remarks at the ‘People’s Livelihood Debate’ held this morning at Aram Nuri, Goyang-si, Gyeonggi-do, under the theme of ‘Housing that the people want’, and announced that he would completely change the regulations on multiple homeowners.

President Yoon said, “It is clear that if punitive taxation is imposed on those who own multiple homes just because they own multiple homes, the tax will be passed on to the tenants, and the damage will be borne by the economically disadvantaged tenants.” At the same time, he emphasized, “It is truly wrong to impose punitive taxation on people who own multiple homes because they are immoral people who raise housing prices, and the damage will ultimately be suffered by the common people.” He added, “We will abolish the heavy tax on people who own multiple homes so that the common people and tenants benefit.”

Some have pointed out that the President’s remarks were somewhat sudden, but the government’s position is that they have been systematically pursued. On this day, First Vice Minister Kim Byeong-hwan said, “The Yoon Seok-yeol government has continued behind-the-scenes work to abolish heavy taxation on multiple homeowners since the beginning of its administration,” and added, “For example, immediately after the inauguration of the government in May 1, it promoted the exclusion of temporary heavy taxation of transfer tax as the first revision of the enforcement ordinance, and the law In relation to this, the comprehensive real estate tax rate has been revised so that up to two houses are not subject to increased taxes,” he explained.

The government plans to operate the tax system under this policy again this year. In particular, we plan to ensure that comprehensive real estate tax is not imposed on newly built small houses even if the owner owns three or more houses. The government explains that such measures to normalize demand will contribute significantly to housing supply, thereby promoting the recovery of real estate and the domestic economy as a whole. Vice Minister Kim said, “Expansion of housing supply is very important not only in terms of stabilizing the real estate market and housing stability, but also in terms of operating the macroeconomy to revitalize the perceived economy and domestic economy,” and added, “The Ministry of Strategy and Finance is working to expand housing supply. “For this, we will listen more to the voices of the field and take immediate action as much as possible,” he emphasized.

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