If a person who holds the right to sell one house sells an existing house within three years after acquiring the right to sell, it is not necessary to pay capital gains tax. In cases where the right to sell one house and one sale inevitably due to school or work is not subject to heavy transfer tax.
The Ministry of Strategy and Finance announced an amendment to the 2020 Tax Law Enforcement Decree.
◆ Alleviation of the tax burden of’temporary one house one sale right’
Among the revised bills, the main contents of the real estate sector are measures to ease the tax burden on the’temporary 1 house 1 sale right’. The government revised the tax law last year and decided to include pre-sale rights in the number of houses when calculating the transfer tax from this year. Until now, if there is one house, even if there are any number of pre-sale rights, it has been considered as one house, but in the future, such a person will be viewed as a multi-home house. The government’s logic was that the right to move in is also included in the number of houses under the transfer tax, but the right to sell should not be an exception.
When this happens, two things are different. Multi-homeowners, including the right to sell, are not eligible for the tax exemption from the transfer tax of one household for one household. In addition, it receives the middle section of the multi-house transfer tax in the area subject to adjustment. It is a system in which 2 homeowners add 10% points to the basic transfer tax rate (6-25%) when disposing of their homes, and 3 homeowners add 20% points.
Many pointed out that even if the tax burden on pre-sale rights is reinforced for equity with the right to move in, inevitably, if you become a two-household unit including the right to pre-sale, you should be considerate. In the case of a tenant right, a temporary one house and one tenant right holder who meets certain requirements is considered as one housing. Accordingly, the government recognized the right to sell one house for a temporary sale and decided to apply the same requirements as the right to move in.
1 If the homeowner acquires the right to sell for at least one year after acquiring the right to sell, and sells the existing house within three years after the acquisition of the right to sell, the transfer tax is exempted. It may be difficult to transfer houses within three years because it takes a long time to construct a house subject to pre-sale. In this case, △Within 2 years after completion of the pre-sale housing, all households move to the house and live for at least 1 year, and △If the existing house is sold within 2 years after completion, a special exemption from transfer tax is granted. 1 Even if the homeowner inherits the right to sell, no transfer tax is charged when selling an existing house.
Temporary one-house sales right holders that meet certain requirements are also excluded from the middle of the two-household transfer tax. This is the case where a person who has only one sale right acquires a house outside of another city, county, or metropolitan area due to reasons such as school or work conditions, and becomes one sale right for one house. This includes cases where the sum of marriage or parental support has resulted in a single sale of one house.
The changed pre-sale right-related system will be applied from newly acquired pre-sale right after January 1 of this year. Sales rights acquired before January 1 are not included in the number of houses when calculating the transfer tax.
The government also agreed to provide a tax deduction of 20,000 won per case if the transfer tax is filed electronically through the National Tax Service’s hometax. Comprehensive income tax, corporate tax (20,000 won) and value-added tax (10,000 won) are based on the point that there is a tax credit for electronic filing, but there is no transfer tax.
◆”Real estate detergent is too complex to be confused”
There is also a content that strengthens the tax burden. 1 In the case of non-taxation of the housing transfer tax, it is in the rules for calculating the housing retention period. 1 In order to receive the exemption from the transfer of housing tax, the housing must be held for at least two years. In principle, the retention period is calculated from the acquisition date to the transfer date. The government revised last year’s tax law to make it difficult for multi-homed people to calculate their retention period. From January 1 of this year, the multi-homed person transferred all other houses and decided to regard the date of becoming one-homed as the’acquisition date’.
Suppose a person acquires house A in January 2019 and disposes of other houses in January 2020 to become one house. If this person sells House A in June of this year, the retention period (January 2019 to June 2021) exceeds two years and receives exemption from the transfer tax of one house, as per the existing regulations. However, with the changed system, the acquisition period of house A is regarded as January 2020, when it became one house, so the holding period is less than two years. You have to pay a transfer tax.
As the calculation of the holding period became tight, there was a movement in the real estate market to find a’bypass’. In the case of disposing of a house through donation or change of use, it is not a’transfer’, so the existing rules for calculating the holding period can be applied as it is. The government also decided to block such a detour. The Enforcement Decree of the Income Tax Act was amended to consider the case of disposing of a house through donation or change of use as the same as for transfer. The use change refers to the case where the officetel is used for residential use and then for business use.
Such system maintenance is inevitable to prevent victims of good faith or abuse of the system, but voices are growing that the system has become a rags due to repeated real estate tax revisions. Shinhan Bank Real Estate Investment Advisory Center Manager Woo Byung-tak pointed out, “All real estate taxes, such as transfer tax, possession tax, acquisition tax, etc., have become so complex that it is difficult for the general public to understand properly, and more and more people are suffering damage by injustice. He said, “If the real estate market stabilizes in the future, it is necessary to keep the overall tax system simple and concise.”
◆Deregulation of public interest corporations even after the Yoon Mi-hyang incident?
The amendment to the enforcement decree also included measures to strengthen the management of public interest and transparency of public interest corporations and organizations. Now, public interest organizations (formerly non-governmental organizations subject to donations) can maintain their qualifications for five years and receive various tax benefits once they are designated, and this period has been decided to be reduced to three years. However, when re-designating an organization that is judged to have secured public interest and transparency as a result of follow-up management, the designated period shall be 6 years. This applies from organizations that apply for designation after January 1 of next year. Public interest corporations (formerly statutory and designated donation organizations) have a three-year designation period, so public interest organizations should also meet these standards and strengthen management. In the case of the’justice memory solidarity’, which caused controversy last year due to accounting corruption, it was classified as a public interest corporation, and the designation period is still three years.
Rather, there is also a content to ease the regulation of public interest corporations and organizations. Currently, accounting settlement documents and statements of the use of donations raised are required to be disclosed respectively, but if the settlement documents are disclosed in a standard format, the obligation to disclose the donation statement is exempted. The requirements for cancellation of public interest corporations were also relaxed. In the event of a violation of disclosure obligations, such as accounting audit, accounting and use of exclusive accounts, and financial statements, it was decided that the inheritance/gift tax must be collected over 10 million won for such violations.
Reporter Seo Min-joon [email protected]