Capital Gains Tax on Single Home Owners to Be Reduced
By Lee Hyo-sik
Staff Reporter
The governing Grand National Party (GNP) plans to lower capital gains taxes for those who have owned one house for a long period of time, regardless of the homes' value.
It will likely ease the comprehensive real estate tax levied on owners of high-priced homes and land during the plenary session of the National Assembly in September to lessen the tax burden on households amid falling housing prices.
Party's chief policymaker Lim Tae-hee said Sunday that the governing party will discuss how to overhaul the all-inclusive property tax regime at the National Assembly in September, adding it will submit a revised bill to lower capital gains taxes for people owning a single home for approval.
``It has been three years since the government introduced the comprehensive real estate tax in a bid to curb rises in property prices. We need to study and figure out how it has affected the real estate market and what its side effects are. Then, we will decide how to revamp it,'' Lim said.
Touching on a bill to raise the home-price ceiling subject to the all-inclusive real estate tax to 900 million won from the current 600 million, initiated last week by Rep. Lee Jong-koo of the GNP, he said the move does not reflect the official party line.
``There has been no discussion about lifting the upper ceiling. The party has also not decided whether to impose the tax on each individual rather than on a household under the current regime,'' Lim noted.
The tax, first levied in 2005, applies a higher progressive tax rate on owners of homes worth more than 600 million won under the government-assessed price standard, to curb demand for luxurious apartments, especially in southern Seoul, and stabilize rises in property prices. Those holding land worth more than 300 million are also subject to the tax.
The number of homeowners subject to the tax has increased sharply over the years. Last year, the number of individuals and businesses subject to the comprehensive estate tax rose 38 percent to 486,000 from a year earlier.
The comprehensive tax reached 2.86 trillion won in 2007, up 65 percent from 2006. Despite falling home prices this year, the number of homeowners subject to the tax is projected to increase further as the government pushes up its standard prices closer to market values.
As the GNP is widely expected to raise the ceiling of the comprehensive property tax and levy it on each individual, instead of a household, many couples who own expensive homes are moving to register their home ownership collectively to pay less property-related taxes.
If the inclusive real estate tax ceiling is pushed up to 900 million won and levied on an individual basis, as well as a home is registered in both names of a husband and a wife, couples who hold homes worth up to 1.8 billion won in government-assessed prices will not be subject to the tax.
Also, couples were able to transfer the ownership of properties worth up to 600 million won to each other early this year without paying taxes, up from the previous 500 million, further encouraging married couples to register properties in both names.