Koo Yun-cheol, Deputy Prime Minister and Minister of Strategy and Finance, said on the 11th that "we have to change it because if we give incentives for holding (dwellings), we cannot shift to a dwelling policy centered on residency."
Koo said this during an interpellation session at the National Assembly that day, noting, "It's not about punishing with (taxes) but about changing the compensation system."
Koo said, "If we do not change the compensation system that gives incentives for holding, people will receive incentives even if they hold two or three (dwellings)," adding, "How can we pursue a dwelling policy centered on residency like this?"
He went on, "What we mean is to change it so that incentives are given when people reside," adding, "If we do not change this system, we cannot build a residency-centered culture." Regarding cases where people cannot reside in a dwelling they hold due to a workplace or other reasons, he said, "If there are reasonable grounds such as schooling, overseas residence, or a workplace, we will allow exceptions."
Koo said, "The vast majority—99%—who have lived with one dwelling will benefit," adding, "If one sees large gains, it is necessary to normalize taxation." He said, "Now we have a residential culture based on residing, and we reasonably recognize unavoidable reasons, don't we?" adding, "People should now feel a burden on capital gains."
Earlier, on the 11th, the government said it would change the long-term 'holding' special deduction in capital gains tax to a long-term 'residency' tax credit starting next year. Only the period of actual residency would qualify for the tax credit. Currently, up to 80% is deducted over 10 years at 4% per year for both holding and residency, but under the government's plan, starting in 2029, only residency would be recognized at 8% per year, with a maximum 80% tax credit.