Posted August. 22, 2005 03:11,
The implementation of the government plan to impose a heavy capital gains tax on owners with two homes is expected to be put on hold for about a year.
Ahn Byong-yub, the Uri partys real estate policy maker, said in a phone-call interview with Dong-A Ilbo that the government should open the way for the home owners to avoid heavy taxes. Delay of the heavy tax measure will be discussed at a party-government consultative conference.
The measure, which is aimed at taxation based on an actual transaction costs, is expected to be implemented in 2007 if the one-year delay is approved.
The government and the ruling Uri Party planned to dramatically increase the capital gains tax on owners with two homes by transforming the current progressive tax rate of nine to 36 percent to a single fixed rate of 50 or 60 percent. However, they came up with the complementary measure in response to public worries over possible unintended victims.
This year, some areas, including the Gangnam area of Seoul and Bundang of Gyeonggi-do have reported a standard market price which is less than 60 percent of the actual transaction.
Mr. Ahn said that the decision on abolishing a ceiling of comprehensive real estate tax increases or conducting an upward adjustment means the choice between a dramatic rise in tax rates next year and a gradual increase over time. He added that many favored abolishing the ceiling.
Meanwhile, the government will decide on the strict definition of an absentee landowner in a bid to prevent stipulations on governmental land development projects.
Currently, landowners who are living outside 20km radius of projected land development areas are categorized as absentee landowners and entitled to be compensated in a form of bonds.