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Government to Increase Bond Land Compensation

Posted July. 07, 2007 03:04,   

한국어

The government will compensate landowners whose land has been designated as part of a “housing land development zone,” in bonds for land compensation exceeding 100 million won, if they have not lived on their land for the past 12 months.

The government will also give an additional five percent discount in capital gains taxes, if the bonds are sold on their maturity date.

Finance Minister Kwon O-kyu announced those changes in the existing land compensation system during an economic policy coordination meeting held at the government complex in Gwacheon on Friday.

An increased amount of land compensation will be paid in bonds instead of cash in an attempt to prevent compensated money from flowing into the real estate market. The government had to compensate 67.1 trillion won for land compensation between 2003 and 2006 due to large-scale land development projects, including innovative city development projects.

In order to introduce the changes, the government plans to revise the existing Land Compensation Act within the year and to compensate a greater amount of money in bonds to those who have not resided on their land over the past year.

Under the current regulations, those who are not residing on their land on the date the government announces its plan for a land development will be paid in bonds for any compensation exceeding 100 million won.

The government also decided to give a 20 percent discount in capital gains taxes for those who do not sell their bonds until the maturity date to prevent them from being changed in cash immediately after a compensation is made. Thus far, compensated land owners have been given a 15 percent cut in capital gains taxes, regardless of the maturity date.

Tax cuts will be retroactively applied from this month to landowners in innovative cities.



koh@donga.com