The government and major parties on Tuesday reached an agreement on a set of tax breaks for home transactions to stimulate the real estate market.

Negotiators from the government, the ruling Saenuri Party and the main opposition Democratic United Party agreed to exempt the acquisition tax for homes costing less than 600 million won ($538,000) when properties are purchased by new homeowners.

The measure, however, does not apply to buyers whose annual income combined with that of their spouse exceeds 70 million won.

The measure will last until the end of the year, and no limitation on the size of the property will be imposed.

In addition, the transfer tax will be exempted for residential properties less than 85 square meters or less than 600 million won, when the seller owns only one property. The transfer tax exemption will stand for five years.

The parties and the government also agreed to negotiate measures for protecting tenants of jeonse and monthly rental properties including placing a ceiling on rents. Jeonse is a local system of property letting where the tenant pays a large deposit at the beginning of the contract, which is then returned in full once the term expires without monthly rental payments.

For rental housing projects receiving state support, additional incentives such as subsidies for repair and maintenance will be considered, the parties said.

The two main political parties agreed to roll out government’s measures as planned unless opposed by the DUP, and to continue discussions at the level of parliamentary committees.

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