Reduced real estate capital gains tax for some on Yoon’s first day


View of apartments in Seoul on Monday from Lotte Tower in Jamsil. [YONHAP]

Capital gains tax for sellers of certain properties will be reduced from Tuesday by the new administration as it works to cool the overheated housing market.

According to the Ministry of Economy and Finance on Monday, the additional tax imposed on owners of two or more dwellings will be suspended for one year.

Under current regulations, 20 percentage points of tax is added to the capital gains tax of 6-45% for those who own two apartments when selling a property. For those with three or more, 30 percentage points are added to the capital gains tax rate.

With the changes, the highest rate drops from 75% to 45%.

The suspension only applies to properties that have been held for more than two years.

Higher capital gains taxes are levied on properties in certain designated areas where prices have risen dramatically in recent years. All areas of Seoul are included and major cities of Gyeonggi.

The move came at the request of Yoon Suk-yeol’s transition team last month to encourage several owners to sell their additional properties before June, when the government imposes a property tax.

During the presidential race, Yoon vowed to tackle the out-of-control real estate market, where prices soared after the Moon Jae-in government imposed heavy restrictions, including tighter lending regulations and higher taxes. , and limited supply.

According to the finance ministry, the number of homes sold in Seoul rose from 188,000 units in 2017, the first year of the Moon administration, to 127,000 units in 2021.

Since Yoon’s tax measure is temporary, it does not require the approval of the National Assembly.

Housing prices have stabilized recently.

According to the Korea Real Estate Board on Friday, house prices nationwide remained unchanged in the week to May 2.

Prices rose 0.1% on a week in Seoul.

The Korea Real Estate Board cited higher interest rates as central banks react to inflationary pressures.

Korea’s central bank, which has raised interest rates since August last year by a record 0.5% to 1.5%, is expected to make further increases later this month.

The US Fed raised rates last week by 0.5 percentage points, the biggest hike in 20 years.

BY LEE HO-JEONG [[email protected]]

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