Korea Keeps 1.2 Billion Won Tax Exemption for Non-Resident Homeowners

* Editor's note: AI PRISM (Personalized Report & Insight Summarizing Media) is an artificial intelligence-based personalized news recommendation and summary service developed with support from the Korea Press Foundation. It selects and provides six news items tailored to each reader type.

1. Despite Tax Relief for Non-Resident Single-Home Owners, Impact on Gangnam Market Remains Questionable

Key summary: The government has confirmed it will maintain the basic comprehensive real estate holding tax exemption for non-resident single-home owners at the current 1.2 billion won and keep the cap on tax burden increases at 150%. Ham Young-jin, head of the real estate research lab at Woori Bank, said the measure will somewhat ease downward price pressure in the Gangnam market, where the number of properties put up for urgent sale because of taxes had increased. The measure is also expected to help stabilize the mindset of high-end single-home owners who hold onto one premium property. Experts, however, point out that the easing felt by investors is limited, given that major elements of tightened taxation — such as the new cap on the long-term holding special deduction for capital gains tax and stricter residency requirements — remain in place.

2. Hana Bank Resumes Mortgage, Jeonse Loan Broker Applications After 10 Days

Key summary: After financial authorities doubled the household loan growth target for banks to 3.0% from 1.5%, Hana Bank resumed accepting applications through mortgage and jeonse loan brokers after 10 days. The household loan growth target for the five major banks was also expanded by about 2.64 trillion won to 6.98 trillion won from 4.34 trillion won. Still, the interpretation is that it is difficult to conclude new borrowing capacity for ordinary borrowers has increased substantially, as a considerable portion of the additional allocation will be used for group loans and existing measures such as the suspension of non-face-to-face mortgages remain in place. Aggregate management through flexible monthly and channel-by-channel adjustments is expected to continue for the time being.

3. Regional Property Markets Weak and Rates Rising, With Delinquency Topping 30% at Some Lenders

Key summary: Three savings banks had property-related loan delinquency rates above 30% as of the end of June this year, while the number with rates above 10% rose to 40, an increase of five in six months. Of the 68,217 unsold homes nationwide at the end of July, 71% were outside the greater Seoul area, which also accounted for 85% of completed unsold units. Delays in converting bridge loans to full project financing, combined with rising interest rates, are deepening a structural problem in which business viability worsens the longer bridge loans are extended. Loans classified as requiring attention or at risk of impairment within project financing exposure across the financial sector rose by 1.7 trillion won, raising risks for regional property investment.

4. Burden Eased for Non-Resident Single-Home Owners, but 1 Billion Won Capital Gains Deduction Cap Stays as Originally Proposed

Key summary: The government will maintain the current comprehensive real estate holding tax for non-resident single-home owners and has raised the per-person exemption for non-resident couples jointly owning a single home to 600 million won from 400 million won. In contrast, core tightening measures such as the 1 billion won cap on the capital gains tax deduction and reduced holding-period deduction benefits remain as originally proposed. Tax industry figures say the basic concept of squeezing Gangnam through taxation has been maintained. With the ruling party and the government calling for further easing, variables remain in the National Assembly review process.

5. Amid Delay in Designating Changsin Redevelopment Operator, Seoul Asks Jongno District to Hurry

Key summary: The Seoul Metropolitan Government sent an unusual letter of cooperation to Jongno District Office requesting prompt completion of administrative procedures after an application to designate the project operator for the Changsin District 9 and 10 redevelopment went unprocessed for nearly three months. Critics note that Changsin District 9, with a consent rate of 75.86%, and District 10, at 75.38%, have met legal requirements, yet public notice has been delayed by the district mayor's policy judgment. With the government and the ruling party pushing to transfer permit authority for small-scale improvement projects to autonomous districts, concerns are growing that redevelopment and rebuilding schedules could be disrupted depending on a district mayor's policy leanings.

6. Seoul to Supply 17,500 More Mirinae Homes by 2030

Key summary: The Seoul Metropolitan Government said it will supply an additional 17,500 units of Mirinae Home public housing for newlyweds by 2030. It has supplied a total of 7,108 units from July 2024 through August this year and plans to secure about 4,000 units annually going forward. The deposit installment payment system, first applied at Jamsil Le-El, was used by 92% of the 533 contract holders, easing an initial payment burden totaling 76.5 billion won. Seoul is also reviewing an expansion of the scope of preferential purchase rights granted for children born before move-in, which is expected to have some effect on supply and demand in the long-term jeonse and rental markets.