Restrictions on Apartment Resales to Get Lifted

The government and the ruling Grand National Party are pushing to cut the limit on the resale of apartments in Seoul, Incheon and Gyeonggi Province by almost half or up to five years.

They will push exemptions on all capital gains taxes if people who have owned only one home for more than 10 years sell it regardless of price.

The party’s subcommittee on measures for unsold houses held a meeting at the end of last month with officials from the Land, Transport and Maritime Affairs Ministry; the Strategy and Finance Ministry; the Financial Services Commission; and the Public Administration and Securities Ministry.

Sources said yesterday that a joint report was concluded on measures to tackle the problem of unsold apartments.

Based on the report, the ruling camp plans to confirm and announce follow-up measures to its earlier proposal on the matter made June 11.

The subcommittee will cut the restriction period for selling a house by about half, but the period will likely differ depending on each area’s population concentration and degree of development.

If housing law changes in accordance to the plans, people can sell their homes without restriction as early as five years after purchase.

All public apartment units built on state-developed sites in the capital region are banned from resale for seven to 10 years. The required time for private apartments is five to seven years.

In provincial areas, the sale restriction for public apartments has been eased from three to five years to one year and that for private ones has been abolished.

In addition, the government and the ruling party revised income tax law to exempt someone who has owned only one house for more than 10 years from capital gains taxes when selling their house.

“We will reduce the tax burden on people who have owned only one house for a long period of time,” said Yim Tae-hee, the party’s chief policy-maker, in a news conference.

Tax deductions on the sale of a single home owner’s house will likely be adopted as the party’s platform, considering that party lawmaker Chung Doo-un proposed a similar motion to the National Assembly.

Also under consideration is reduction of capital gain taxes by year’s end if a single home owner buys an unsold house outside the capital region and sells it later.

A temporary tax cut by 9 percent to 36 percent will seek to increase demand for houses in provincial areas. According to income tax law, a person with two homes must pay 50 percent of the profit made by selling one of the homes in tax.

legman@donga.com