Upcoming July Real Estate Policy: Key Points on Comprehensive Real Estate Tax and Capital Gains Tax Reform

The government is set to announce a 'Comprehensive Real Estate Policy' late this month, focusing on the reform of the Comprehensive Real Estate Holding Tax and Capital Gains Tax. This policy is expected to focus on normalizing punitive tax regulations against multiple-home owners and revitalizing market transactions.

What are the Key Reforms in the July Real Estate Policy?

Amid growing fears of a "loan cliff" due to the recent drastic reduction in mortgage limits, the government has brought out the card of real estate tax reform. The core issues include the abolition of heavy tax rates for multiple-home owners, the application of a basic tax rate, and raising the basic deduction amount for single-home owners.

• Abolition of Heavy Real Estate Tax: Discussions on abolishing the maximum 5.0% heavy tax rate applied to multiple-home owners and moving to a single tax rate system.
• Easing of Capital Gains Tax Exemptions: Relaxation of actual residence requirements and expansion of special deductions for long-term holding.
• Reduction of Acquisition Tax Rates: Gradual easing of heavy acquisition tax rates for owners of two or more homes under review.

In online real estate communities, there is a fierce debate between expectations that "excessive tax burdens will finally be resolved" and concerns that it will "stimulate a balloon effect, spreading housing price hikes to the outskirts of the metropolitan area."

Real Estate Tax Reform Q&A

Q. When will the easing of real estate taxes for multiple-home owners take effect?

A specific roadmap will be included in the comprehensive real estate policy announced late this month, and it is highly likely to be applied starting with next year's tax payments after going through the legislative process.

Q. Will the concentration on 'one premium property' intensify?

If the capital gains tax and comprehensive real estate tax burdens on multiple-home owners decrease, the incentive to stick to 'one premium property' in core areas diminishes. Therefore, analysts suggest that buying demand may disperse to the outskirts of Seoul or major metropolitan areas, leading to a recovery in transaction volume.

Q. Doesn't this conflict with the Stress DSR loan regulations?

While financial authorities are tightening loan regulations to manage household debt, the Ministry of Economy and Finance and the Ministry of Land, Infrastructure and Transport are pushing to ease transaction bottlenecks through tax normalization. The mismatch between these two policies could cause confusion in the market, requiring close monitoring.