Tax benefits for "unsold post-completion housing in non-capital regions," which were set to expire at the end of this year, will be extended by another year. The government's strategy is to curb rising home prices in the overheated capital-area housing market through stringent property holding taxes, while continuing easing policies for regional areas where the downturn persists.
According to the Ministry of Economy and Finance, the Ministry of Land, Infrastructure and Transport, and other related agencies on the 9th, the government plans to include in the tax code revision to be announced late this month a measure to extend the application period for capital gains tax and comprehensive real estate tax benefits under the Restriction of Special Taxation Act. The benefits, for buyers of unsold post-completion housing in non-capital regions, would be extended by one year from the current end of 2026 to the end of 2027.
Under the current special provisions, when a single-home household additionally purchases unsold post-completion housing outside the capital area with an exclusive area of 85 square meters or less and an acquisition price of 700 million won or less, the household's existing home is still regarded as a single home. As a result, when selling the existing home, the household can receive a tax exemption on transfer value up to 1.2 billion won and a special long-term holding deduction of up to 80 percent. For the comprehensive real estate tax as well, the household is recognized as a single-home household, entitling it to a basic deduction of 1.2 billion won and tax credits for the elderly and for long-term holding on the existing home.
As of May this year, unsold post-completion housing, often called "toxic unsold housing," totaled 29,350 units nationwide. Of these, the capital area accounted for only 4,828 units, while non-capital regions accounted for 24,522 units, or 83.6 percent of the total. "If regional unsold housing accumulates, it could lead not only to a construction slowdown but also to weakened consumer sentiment," a government official said.
