South Korean party seeks overhaul of property tax rules

The Democratic Party is signaling a need to revise and supplement the government's proposed real estate tax reforms, with a notable internal push to remove distinctions based on residency status for comprehensive real estate tax (종부세) calculations. Rep. Oh Ki-hyung, the ruling party's liaison for the Finance and Economy Planning Committee, stated on KBS radio that there was significant consensus within the party that differentiating between residents and non-residents for tax purposes is unnecessary.

"There was a perception and proposal that there is no need to distinguish between actual residents and non-residents, and there was considerable agreement," Oh explained. He added that the party is now considering whether to unify the basic deduction for both groups at 12 billion won or 14 billion won. While the party generally leans towards unification, Oh acknowledged that the government's prior announcement of a differentiated approach might lead to a search for options within that framework.

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There was a perception and proposal that there is no need to distinguish between actual residents and non-residents, and there was considerable agreement. Then it's one of two options: unify (the basic deduction for residents and non-residents) at 1.2 billion won or at 1.4 billion won.

The government's original proposal aimed to lower the basic deduction for non-residents from the current 1.2 billion won to 900 million won, while raising it for actual residents to 1.4 billion won. Earlier, Democratic Party leader Kim Min-seok had requested an expansion of exceptions for single-home non-resident owners, adjustments to the basic deduction for them, and a review of the tax burden limits for comprehensive real estate tax during a high-level party-government meeting.

Regarding the government's plan to increase the tax burden limits for housing and land taxes from 150% to 200%, Oh expressed a preference for maintaining the current limits. He suggested that discussions around the comprehensive real estate tax are being influenced by considerations of predictability and public acceptance. However, opinions within the party differ on the specific criteria for the official price of non-resident single-home owners' comprehensive real estate tax basic deduction. One second-term lawmaker noted the government's clear direction towards prioritizing resident-focused real estate policies, questioning the government's willingness to abandon differentiation. While some party members advocate for raising the deduction to 1.4 billion won for both residents and non-residents, others oppose a uniform application.

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Can the government afford to abandon differentiation, given the clear direction of real estate policy prioritizing residents?