SEJONG -- Homeowners will enjoy an increased capital gains exemption when they sell their homes after a law was passed.
The National Assembly has passed the bill on raising the upper level for the tax exemption from the current 900 million won to 1.2 billion won. The revised law -- which is not applicable to multiple homeowners but to those owning only one home -- will take effect in the coming weeks.
Under the current 900 million-won standard, a homeowner who purchased a property at 700 million won and sold at 1.2 billion won had to pay more than 13 million won in capital gains tax. But the revised law enables the sort of traders pay nothing as the sale price did not exceed the 1.2 billion-won mark.
The legislation has come amid a recent slump in real estate transactions. But market insiders and online commenters have taken skeptical view about the possibility that the market could be revitalized.
Kim Hyo-sun, a real estate researcher at NH Bank, was quoted by a news outlet, as saying that many people are anticipating a complete overhaul of “the taxation system involving the comprehensive real estate tax (as early as next year). The current easing of capital gains taxes would not be beneficial to stabilizing housing prices.”
His remarks indicate that a large portion of homeowners are pinning hopes on an overall cut in real estate-related tax rates after May 10, when the new administration is set to take office via the March 9 presidential election.
Online commenters say that the exemption from capital gains taxes -- up to 1.2 billion won in home prices -- should include “multiple” homeowners for efficacy of the revised law.
“There is no doubt that more supply in the market could be attained through easing tax burden on those owning two homes or more,” a commenter said.
Though the National Assembly has pushed to ease tax burden for multiple homeowners, as well as owners of one home, the Ministry of Economy and Finance has reportedly opposed the move.
Cheong Wa Dae has also reportedly taken pessimistic stance over the move, while the ruling Democratic Party of Korea has vitalizing the scheme for multiple homeowners in close talks with opposition parties.
By Kim Yon-se (email@example.com