Yoon administration to ease tax burdens on multiple homeowners
Incoming gov’t eyes ‘bad bank’ to aid self-employed
The incoming Yoon Suk-yeol administration plans to ease tax burdens on multiple home owners by suspending the current regulation of imposing heavier real estate transfer taxes on people who own more than one home for at least one year. The move is aimed at undoing the incumbent Moon Jae-in administration’s bolstered regulations on owners of multiple homes. By lowering the taxes levied on property sale for such people, the Yoon government seeks to increase the supply of homes in the real estate market and stabilize the country’s housing prices.
Choi Sang-mok, a member of the presidential transition committee’s economic subcommittee, said Thursday he will ask the government to suspend heavier real estate transfer taxes on home owners for one year from next month.
“This is aimed at multiple home owners who are subject to heavier gross real estate taxes, to sell their properties before June 1, which is the base date for calculating the gross real estate tax,” Choi said during a press conference on the transition committee’s economic policy meeting on Thursday.
“Through this, the committee seeks to increase the number of homes up for sale and therefore stabilize the real estate market.”
Tough regulations
The Moon administration blamed real estate speculation as the main culprit behind the country’s soaring home prices and introduced a series of tough regulations on those who possess more than one home. Since June 1, the government has been levying up to a 75 percent tax when those who own more than one home sells one of them. Unlike the government’s intention, however, the number of homes available on the market plunged, because homeowners refrained from selling their homes while looking for ways to bypass the regulation.
To address this, Yoon pledged to suspend levying heavier transfer taxes on people who owned multiple homes for two years, in order to increase the overall number of homes available on the market.
Choi said the committee will call on the government to suspend the regulation for one year, as it seeks to have more homes to become available on the market promptly.
“Since the country’s gross real estate tax is calculated based on the status of June 1, we are informing this preemptively to help them avoid heavier taxes,” Choi said. “If the current government refuses to accept this, we will begin implementing it from May 11, a day after the new administration’s inauguration.”
However, concerns are already growing that the suspension may spur real estate speculation again, as easing real estate regulations may lead to additional housing price hikes.
Also at the meeting, Ahn Cheol-soo, the head of the presidential transition team, proposed to establish “a bad bank” to aid small business owners and the self-employed suffering from financial difficulties due to the government’s COVID-19 restrictions.
“The current measures of extending debt maturity for months for small business owners and the self-employed is the same as putting an oxygen mask on a critically ill patient, and this faces its limit,” Ahn said.