Government and Uri Party Plan to Lower Real Estate Registration Tax by 0.5 Percent

The government and the ruling Uri Party have agreed to lower the rate of the real estate registration tax, which is levied on sales and purchases of houses and buildings by individuals, by 0.5 percent in a move to cushion the effects of rises in taxes as a result of the introduction of comprehensive real estate taxes.

Last week, the government and the Uri Party said they agreed to lower the registration tax rate to two percent from three percent. With a further cut of 0.5 percent, the rate will stand at 1.5 percent.

The decision was made on November 16 at a government-party meeting attended by Uri Party floor leader Chun Jung-bae, its chief policymaker Hong Jae-hyeong, party-government coordinator Lee Gye-ahn, and Assistant Finance and Economy Minister Kim Gwang-lim.

They decided to lower the rate for individual transactions of houses and building, but the new rate won’t be applied to corporate transactions such as preconstruction purchases of new apartment units.

This is due to the fact that personal sales and purchases of houses are charged with heavier taxes because they are levied by the National Tax Service’s standard prices while taxes on corporate transactions will remain unchanged next year as they are levied by market value.

The government and the party plan to consider readjusting tax rates on new houses to rates on apartments and other common housing units or putting a 50 percent ceiling on increases in taxes on them as new houses will likely face heavier ownership taxes as a result of a poor tax code.

The Uri Party will endorse the sponsoring of the comprehensive real estate tax bill at a general policy meeting by its lawmakers on November 18. Rep. Kim Jong-ryul will propose the bill on the party’s behalf to introduce the tax within this year.

Young-Hae Choi yhchoi65@donga.com