South Korean Parties Debate Real Estate Tax Reforms, Focusing on Non-Resident Homeowners

South Korean political parties and the government are engaged in detailed discussions regarding proposed real estate tax reforms, focusing on adjustments to capital gains tax and the comprehensive real estate holding tax. Kim Min-seok, leader of the Democratic Party, has voiced his opinion that the criteria for "unavoidable non-residence" for homeowners should be interpreted more broadly to avoid creating loopholes.

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For non-resident one-home owners, we must broadly recognize the various unavoidable reasons for non-residence in reality, and there should be no blind spots.

Kim stated at a high-level party-government consultation meeting that while he agrees with the government's direction on expanding housing supply and tax reform, specific improvements are needed. He emphasized that "for non-resident one-home owners, we must broadly recognize the various unavoidable reasons for non-residence in reality, and there should be no blind spots."

This stance suggests a desire to expand the circumstances under which a period of non-residence can be treated as a period of residence for tax calculation purposes. The government's initial proposal includes recognizing up to three years of non-residence as residence for tax calculations in cases such as attending high school or university, job transfer or relocation, requiring medical treatment for over a year, transferring schools due to school violence, overseas stays for study, or caring for elderly parents.

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deep deliberation

Kim also called for a "deep deliberation" on the government's plan to lower the basic exemption for non-resident one-home owners from 1.2 billion won to 900 million won and increase the comprehensive real estate holding tax burden limit from 150% to 200%. He urged a reconsideration of these specific adjustments.

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all possible means and methods

Furthermore, Kim expressed concerns about the potential negative impact of converting the long-term holding special deduction for capital gains tax into a long-term residence income deduction. He believes this shift, while positive in its focus on owner-occupied housing, needs careful examination to ensure it does not adversely affect the 전·월세 (jeonse/monthly rent) market. Regarding housing supply, Kim urged the government to mobilize "all possible means and methods" to secure land and expand housing construction.

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As stated by President Lee Jae-myung at the cabinet meeting on the 11th, the tax reform plan was not an announcement of a decided policy, but a proposal to start listening to the opinions of the people.