South Korea's ruling party and government have begun revising a property tax overhaul to ease the comprehensive real estate tax burden on people who own a single home but do not live in it. The Democratic Party has strongly opposed charging the tax differently depending on whether single-home owners live in their property, raising the likelihood that the government's proposal will be changed.
At a high-level party-government meeting on the 23rd, Democratic Party leader Kim Min-seok said the tax burden on non-resident owners is already rising naturally as official property values climb, even under the current system. Kim said a plan to lower the basic deduction for non-resident single-home owners to 900 million won from 1.2 billion won and to raise the cap on tax increases to 200% requires deeper deliberation.
The government had earlier proposed cutting the basic deduction for non-resident single-home owners to 900 million won from 1.2 billion won, while raising it to 1.4 billion won from 1.2 billion won for owners who live in their homes. But Democratic Party chief spokesperson Park Seong-jun said the party had strongly requested that no distinction be drawn between resident and non-resident single-home owners. At the meeting, a plan to set the basic deduction for non-resident single-home owners at the same level as for resident owners was also discussed, according to officials.
Exemptions from the long-term holding special deduction on capital gains tax may also be expanded for non-resident single-home owners. As the system shifts from rewarding ownership to rewarding residence, the plan would broaden exemptions for single-home owners who cannot live in their property for unavoidable reasons, such as a job transfer.
Park said owners might not live in their homes in unavoidable cases. He gave the example of someone transferred for work who still owns a home in Seoul, saying the government would accommodate such cases and address them through the system.
The party and government also agreed to accelerate the easing of rules on redevelopment projects to expand housing supply in central Seoul. They plan to hand approval authority for redevelopment projects of 500 units or fewer to district offices and other basic local governments. The change can be made through a revision of the presidential decree alone, but the parties agreed to consider amending the higher Act on the Maintenance and Improvement of Urban Areas and Dwelling Conditions if needed. They also agreed to actively discuss easing floor area ratio limits on private redevelopment and reconstruction projects.
The Democratic Party plans to speed up talks with the government to draw up a revised tax plan. The party and government intend to report the revised proposal to the Cabinet on the 1st of next month and submit related bills to the National Assembly on the 3rd.
