Koo Yun-cheol, Deputy Prime Minister for Economy and Minister of Economy and Finance, presented a supplementary plan at a Cabinet meeting held at the Blue House on the 3rd regarding the expiration on May 9 of the temporary suspension of the heavy capital gains tax on multiple-home owners, saying that if a sales contract for dwellings is signed by May 9, the suspension will be extended for three to six months until the time of final payment or registration.
At the meeting, Deputy Prime Minister Koo said, "In principle, the suspension of the heavy capital gains tax on multiple-home owners will end, but given real estate transaction practices and the recent expansion of areas subject to adjustment, it is necessary to minimize market confusion and public inconvenience," and reported this plan.
According to the supplementary plan, for existing areas subject to adjustment, the suspension applies if final payment or registration is completed within three months after the contract; for areas newly designated by the Oct. 15 measures last year, it applies if completed within six months.
Currently, when a multiple-home owner transfers dwellings in an area subject to adjustment, a system of heavy capital gains taxation applies that adds 20 percentage points to the basic rate for owners of two homes and 30 percentage points for owners of three or more homes. This system has been temporarily suspended from May 9, 2022, to May 9 this year.
Deputy Prime Minister Koo said, "As a result of operating the policy, policy credibility has been undermined, and side effects have emerged that induce abnormal and unfair transactions," adding, "It is now necessary to normalize the system."
In addition, considering transaction practices in land transaction permission zones, the need for adjustments regarding deadlines for final payment and registration in the three Gangnam districts (Gangnam, Seocho, and Songpa) and Yongsan was also raised.
Deputy Prime Minister Koo said, "In land transaction permission zones, it usually takes four months from permission to final payment and actual occupancy," adding, "There was an opinion that even if a contract is signed by May 9, the deadline for final payment should be four months, not three." He went on to note, "We will listen to the market and make adjustments."