50-pct. cut in home acquisition tax under consideration

Owners of homes worth more than 900 million won (800,000 U.S. dollars) and those owning more than one home will receive a 50-percent cut in the home acquisition tax instead of the temporarily eased debt-to-income rule that expires this month.

The ruling Grand National Party Monday accepted the government’s plan to end the relaxed debt-to-income rule on the condition that it come up with other effective measures to boost the real estate market.

According to the government and party, the Strategy and Finance Ministry is considering lowering the home acquisition tax from 4 percent to 2 percent for owners of homes worth more than 900 million won.

The ministry is also considering extending the 50-percent acquisition tax cut for those owning homes worth less than 900 million won (800,000 U.S. dollars), a break that will expire at the end of 2012.

With household loans at a record 800 trillion won (711 billion dollars), the government fears that extension of the relaxed rule could fuel a further surge in household debt, which in turn will damage the financial soundness of financial institutions and the government’s macroeconomics operation.

Strategy and Finance Minister Yoon Jeung-hyun said, “It`s important to have a strict DTI rule for soundness of financial institutions, and real estate market stabilization measures should be approached separately.”

witness@donga.com