The National Assembly’s Public Administration and Security Committee on Wednesday approved a bill to extend the real estate acquisition tax reduction by six months.

The proposed revision to the Restriction of Special Local Taxation Act is part of measures to revive the fragile property market.

Saenuri Party policy committee chief Rep. Chin Young had initially proposed extending the cut by one year.

The committee shortened the term due to concerns that it will damage provincial governments’ finances.

Lawmakers also added a clause calling for the central government to compensate for the decrease in tax revenues of local governments resulting from the extended tax breaks, said Rep. Hwang Young-cheul, the Saenuri Party’s representative in the Public Administration and Security Committee.

The measure will be retroactively applied to transactions that have taken place since Jan. 1.

Under the temporary measure, the tax rate on residential properties under 900 million won ($826,000) is halved to 1 percent, while that on properties between 900 million and 1.2 billion won is reduced to 2 percent from 4 percent. Properties exceeding 1.2 billion won will continue to be taxed at 3 percent instead of the usual 4 percent.

By Choi He-suk  (cheesuk@heraldcorp.com)