Posted December. 13, 2004 22:26,
Starting January 2005, a taxation system to impose heavy transfer tax on households with three houses or more will be enforced as scheduled.
Under the new system in place, owners of three houses or more will be required to pay 60 percent of their transfer margins in transfer tax when they sell their house(s). However, 15 percent of flexible tax rates, additionally required for housing speculative regions, wont be imposed.
Economic Deputy Prime Minister Lee Hun-jae convened a morning meeting with relevant ministers, including Minister of Government Administration and Home Affairs (MOGAHA) Hur Sung-kwan and Minister of Construction and Transportation Kang Dong-seok, at the Seoul Palace Hotel on December 13 and made the decision.
The government plans to introduce the system to impose 60 percent of transfer margins in transfer tax on each household with over three houses in January 2005, but it will review complementary measures if needed.
The heavy transfer taxation system has been creating quite a stir in the real estate market since Prime Minister Lee made clear his plan to review the delay of its enforcement, and Presidents Advisory Policy Commission Chair Lee Jung-woo publicized his strong will to enforce it at any cost.
An official from the Ministry of Finance and Economy explained, The income taxation system was revised at the end of last year, implementing foundational rules to impose an additional 15 percentage points of flexible tax rate in case of transfer tax in housing speculative areas. Specific schemes regarding its enforcement will be included in its enforcement ordinance. He added, Flexible tax rates wont be imposed.
Estimates have it that 100,000 or so people nationwide are eligible for heavy transfer tax payments for owning three houses or more.
Among housing transactions reporting areas where transactions tax such as acquisition and registration taxes are imposed based on real transactions cost, overheated speculative areas where house resale rights are limited, and speculative areas where transfer tax is imposed based on real transactions cost, the government decided to conduct some fact-finding and will lift the restrictions from regions that have stable real estate prices and are free of speculation concerns.