Changing Policies to Activate Real Estate Transactions

Eleven property speculation zones, including Jungrang-gu and Seodaemun-gu in the Seoul metropolitan areas and the Chungcheong area, will be lifted, and people selling homes in these areas will be somewhat relieved from the burden of the capital gains tax.

Also, six areas of home transaction report including Gangnam-gu and Songpa-gu in Seoul will be partly lifted early next year.

The government’s real estate policies are changing from preventing speculation to reactivating transactions, but experts forecast that it is uncertain whether the real estate market will recover.

The government held a meeting for the real estate price stabilization committee (Chairman Kim Gwang-lim, Vice Finance-Economy Minister) at the Bankers Club in Myung-dong, downtown Seoul, and decided on lifting 11 of the 50 property speculation zones.

The lifted areas decided in the meeting are the following: Jungrang-gu and Seodaemun-gu in Seoul, Namdong-gu and Bupyeong-gu in Incheon, Gunpo, Uiwang, Hanam, Deokyang-gu, Goyang in Gyeonggi Province, and Seo-gu, Yuseong-gu and Daedeok-gu in Daejeon.

Those selling homes in the above listed areas will be paying the capital gains tax by the tax standard value of the National Tax Service and not by the actual transaction price, starting on December 29.

This is the second time for a lift in the speculation zones after the first lift of seven zones in August including Buk-gu, Busan, and the first including the Seoul metropolitan area.

Vice Minister Kim said, “We have decided on lifting the speculation zones after consideration on the current economic situation, the move in real estate prices, and future real estate prices. Pyeongtaek and Anyang in Gyeonggi Province and Cheonan and Asan in Chungnam Province were originally candidates for the lift, but they still showed factors for a price jump, and were excluded this time.”

The July 2005 launch for the actual transaction price reporting system for real estates, which was in the revised bill for the real estate business law, will be carried out after January 2006.

When the actual transaction price reporting system is in effect, acquisition tax and registration tax will be levied by the actual transaction price for those buying houses.

Chi-Young Shin Kwang-Hyun Kim higgledy@donga.com kkh@donga.com