Additional Decrease in Real Estate Transaction Taxes Is Considered

As means to reduce the resistance to the comprehensive real estate taxes, a decrease in real estate transactions taxes, such as acquisition taxes and registration taxes, is under consideration.

The government has also decided to prepare a method to supplement the controversial “50 percent increase limitation of possession tax’” to newly constructed houses.

According to the government and the Uri Party on November 14, as opposition to the introduction of comprehensive real estate taxes arise from the Grand National Party and even the Uri Party, the Ministry of Finance and Economy has decided to open a party-government consultative conference on November 15 to discuss additional decreases in transaction taxes than originally planned.

In accordance with the decision to increase possession taxes and decrease transaction taxes, the government and the Uri Party have already decided to lower the transaction taxes, such as registration taxes, from the current 3 percent to 2 percent by next January, while introducing the comprehensive real estate tax. In addition, they will urge local government bodies to lower registration taxes.

However, at the Uri Party representative plenary session that was held on November 12, the assertion that ‘to increase possession taxes the transaction taxes must be further decreased’ was strongly lodged and the Grand National Party is also demanding an additional transaction tax decrease.

Lee Gye-an, chairman of third policy coordination committee of the Uri Party, said, “At the conference held on November 15 the chief topic will be the time of enforcement and the decrease of transaction taxes of the new possession taxation systems such as the comprehensive real estate taxes,” and that, “rather than deferring the enforcement time, which is the second half of next year, the decrease of transaction taxes as a means to offset opposition will be considered.”

Chairman Lee said, “Lowering the registration tax rate to below 2 percent could be taken into account.” He added that as decreases in registration tax rates through reduction regulations of local government bodies will be difficult if local government bodies refuse, stipulating it into the law can be considered.

Related to this a high ranking officer of the government displayed a negative position by replying, “an 1 percent decrease in transaction taxes is a device arranged through contemplations for over a year and as the situations of the local government bodies are diverse, enforcement of additional decreases through law will be difficult”.

On the other hand the Ministry of Finance and Economy is devising a plan to apply the “50 percent increase limitation of possession tax” to those who have moved in to a newly distributed apartment or for those who buy a house.

Chi-Young Shin Yong Park higgledy@donga.com parky@donga.com