Posted April. 28, 2005 23:41,
Starting from July, the real east capital gains tax and inheritance tax on 6.2 million homes throughout the nation will be re-evaluated in accordance with real estate prices to be announced today by the Ministry of Construction and Transportation
Accordingly, the nations burden of these taxes is expected to increase, especially those areas located in the capital, metropolitan and the Chungcheong area.
Leaseholders who used to enjoy exemption from comprehensive real estate taxes will lose this privilege if their houses are valued at over 300 million won. Thus, those who have rental houses in the Gangnam area, Seoul will no longer enjoy this exemption.
The Ministry of Finance and Economy held a deliberative committee meeting for the development of the tax system yesterday, in which they decided on the above measures.
According to the measures, starting from July, real estate prices announced by the Ministry of Construction and Transportation, which represents 80 percent of market value, will be used as the tax basis for the capital gains tax and the inheritance tax. Until now, prices announced by the National Tax Service, which consisted of land prices announced by the Ministry of Construction and Transportation and building prices evaluated by the National Tax Service, were used as the tax basis.
In regards to apartments, prices announced by the National Tax Service will continue to be used as the tax basis.
Since we expect that the newly estimated tax basis in local areas is falling, which seems to be offsetting the increase of price in urban houses, there will be little change in the total amount of tax revenue, said, Lee Jong-gyu, chief of the tax system of the Ministry of Finance and Economy
However, real estate experts predicted that since the current tax basis evaluated by the National Tax Service represents only 40 to 50 percent, the newly evaluated system will pass more burdens to the people.
The Ministry of Finance and Economy also announced that when people purchase houses for leasing, they can be entitled to an exemption from the comprehensive real estate tax if the announced value of the house is under 300 million won and, within 10 years, they lease at least five houses (they must be located in the same city or province) with 25.7 pyeong of using area.
On the other hand, the National Tax Service announced the falling prices of apartment houses, whose number is roughly 6.5 million, compared to last year.