The government said on the 12th that "a 'preliminary contract' made before May 9 is not eligible for the temporary suspension of the heavier capital gains tax on multi-homeowners." It said the suspension applies only if there is proof that a formal sales contract was signed and the deposit was received.
The government released a Q&A on "the end of the suspension of heavier taxation for multi-homeowners and supplementary measures" that day. The government will end, as scheduled on May 9, the suspension of the heavier capital gains tax on multi-homeowners. However, if a sales contract is signed by May 9, buyers and sellers will be given 4 to 6 months, depending on the area, to settle the balance and complete registration.
◇ If you sell a home by May 9 and finish the balance and registration within 4 to 6 months, the heavier capital gains tax will not apply
Under the Oct. 15 real estate measures last year, the government newly designated 21 of Seoul's 25 districts, excluding the three Gangnam districts (Gangnam, Seocho, Songpa) and Yongsan, and 12 areas in Gyeonggi Province (Gwacheon, Gwangmyeong, Suwon Yeongtong, Jangan, Paldal, Seongnam Bundang, Sujeong, Jungwon, Anyang Dongan, Yongin Suji, Hanam, Uiwang) as land transaction permit zones. If a multi-homeowner with a house in these areas sells by May 9 and completes the balance and registration within six months (by Nov. 9), the heavier capital gains tax will not apply.
For multi-homeowners in the three Gangnam districts and Yongsan-gu, which were already regulated areas before the Oct. 15 measures, it is sufficient to sign a sales contract by May 9 and complete the balance and registration within four months (by Sept. 9).
A government official said, "A preliminary contract or a prior transaction agreement before a land transaction permit does not constitute a 'contract.'" The official added, "Only cases in which a sales contract is signed by May 9 and the receipt of the deposit is verified by supporting documents are included in the suspension of the heavier capital gains tax."
◇ Effect of allowing "gap investing" by first-time homebuyers that the Oct. 15 measures had blocked
The government decided to ease the owner-occupancy requirement when a first-time homebuyer purchases a multi-homeowner's house that has a tenant. Currently, from the date the transaction is permitted, the buyer must settle the balance within four months and begin actual occupancy. If a tenant refuses to vacate within four months because there is time left on the lease, it is difficult to meet this requirement, blocking the transaction.
In response, the government will revise an enforcement decree within this month to defer the start of actual occupancy by the homebuyer until the expiration of the existing tenant's lease. A government official said, "By Feb. 11 two years from the date of the policy announcement, actual move-in is required." This applies to all housing transactions in regulated areas. As a result, the blanket ban on "gap investing" within regulated areas under last year's Oct. 15 measures will be eased, effectively allowing gap investing.
The government also decided to push back the move-in deadline for homebuyers who took out a mortgage loan. Previously, under the "household debt management plan" released on June 27 last year, first-time homebuyers who purchased a multi-homeowner's house in a regulated area were required to file a move-in report within six months from the date the mortgage loan was executed. The government will revise the relevant rules to allow filing the move-in report "within one month from the lease expiration date."
☞ Gap investing
This refers to an investment method in which a buyer purchases an apartment where the difference (gap) between the jeonse price and the sales price is very small, and then raises the jeonse deposit in a short period to induce a rise in the sales price. For example, if the sales price of a home is 300 million won and the market jeonse deposit is 250 million won, the buyer purchases the home with the tenant in place by paying 50 million won. Critics say this encourages a rise in real estate prices by enabling people without much money to buy homes.