South Korea to Keep 12 Billion-Won Basic Deduction for Nonresident Single-Home Owners, Drop ISA Overhaul

South Korea's government backed away from several planned tax increases and restrictions, keeping existing benefits for nonresident single-home owners and individual savings accounts.

At a Cabinet meeting on the first day of the month, the government finalized an amendment package covering 11 tax laws. The plan will keep the basic comprehensive real estate tax deduction for a nonresident owner of one home at 1.2 billion won. It will also maintain a 1.4 billion-won deduction for an owner who lives in the home, as previously proposed.

The government had initially planned to reduce the nonresident deduction to 900 million won under a principle favoring actual residence. It also considered cutting the deduction for a nonresident couple jointly owning one home from 1.8 billion won in total to 800 million won. The final plan sets the joint deduction at 1.2 billion won, with 600 million won for each owner.

The government further decided to retain the current 150% cap on year-on-year increases in property holding taxes. An earlier proposal would have raised the cap to 200%.

It also abandoned a planned overhaul of individual savings accounts. Account maturities will remain extendable without limit after the mandatory three-year holding period, and unused annual contribution allowances can still carry over. The same terms will apply to a new ISA for domestic stocks and funds, while young people may hold both a youth ISA and a Youth Future Savings account.

The Finance Ministry said it revised the plan to reflect issues raised during the notice and interagency consultation process. The package will be submitted to the National Assembly on the third. A proposed law against deliberate share-price suppression will receive further revisions during parliamentary review.

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We revised the plan to reflect issues raised during the legislative notice and interagency consultation process.