S. Korea to impose heavier taxes on multiple home owners

The government on Friday unveiled a set of new real estate regulations centered on raising taxes on owners of multiple homes, as part of a move to rein in soaring housing prices. 

According to the latest version, marking the 22nd of its kind since the Moon Jae-in administration took office in May 2017, those who either own three houses or more and homeowners with two houses located in some speculative areas, including Seoul and surrounding cities, will face a comprehensive real estate tax in a range between 1.2 percent and 6 percent, up from the current 0.6 to 3.2 percent range.

“(The government) will stem speculative buying of houses, while ramping up efforts to protect ordinary homebuyers from skyrocketing housing prices,” Deputy Prime Minister and Finance Minister Hong Nam-ki said in a joint press briefing at Seoul Government Complex on Friday morning held to announce the proposal on real estate taxation.

To put a brake on property speculation, the government also increased the sales tax rate by up to 70 percent. Homeowners who attempt to sell a house within a year of purchase, for instance, are subject to 70 percent in sales tax while those seeking short-term gains through housing transactions in less than two years are levied a 60 percent sales tax.

Those multiple-home owners with two or more houses can be subject to up to 30 percentage points of additional sales tax when they sell a house.
The rules regarding short-term sales and the heavy sales tax will go into effect on June 1 next year to allow a grace period for homeowners.

The move came as the heated house market is showing no signs of stabilizing despite a series of governmental regulation packages, including one released June 17 that involves tightened rules for loans and an expanded range of speculative zones.

The average apartment price in Seoul as of the first week of June saw a 0.11 percentage point rise from a week earlier, the highest figure in seven months, according to the Korea Appraisal Board.

Meanwhile, authorities said tax benefits will be ended for people running rental home businesses, which the government has pointed to as a main culprit of the hot housing market.

The government will fine-tune the latest real estate plan with state agencies and try to pass it at the temporary parliamentary session this month, hoping to implement the revised law as early as next year, the finance minister said.

By Choi Jae-hee (cjh@heraldcorp.com)