Buyers of Unsold Homes Pay No Capital Gains Tax
By Yoon Ja-young
Staff Reporter
Those who buy unsold apartments in the provinces will pay no capital gains tax even if the apartment price has risen when they sell the home later, leading to a huge investment return. Meanwhile, businesses that retain their number of employees will get corporate tax cuts.
The Ministry of Strategy and Finance announced Monday that it had revised a number of tax codes, following the passage of tax revision at the National Assembly.
According to the revision, those who buy unsold apartments or houses by Feb. 11 next year will not pay capital gains tax if they sell within the next five years.
In metropolitan areas, the homes should be smaller than 149 square meters to get the tax cut. Capital gains taxes on the homes will be slashed by up to 60 percent. In rural areas, meanwhile, all unsold houses will be subject to 100 percent tax exemption regardless of size.
The government also increased income deductions for those who buy the unsold homes on loans; they will get deductions on the interest payments, further lightening their tax burdens.
The measure aims at encouraging people to buy unsold homes. Amid the collapse of the housing bubble, construction companies have been suffering from liquidity shortages, as they are unable to find buyers for the homes, particularly in the provinces.
The government also announced that businesses that experience difficulties would get corporate tax cuts only if they participate in the job-sharing program. According to the revision, businesses that maintain the number of full time workers from the previous year will be eligible for corporate tax cuts if their sales or production drop by over 10 percent or monthly average stocks increase by over 50 percent.