Policy recommendations including Kim Jin-pyo and Kim Byeong-wook
“Relieving the’deal cliff’ only when multi-homeowners give out their sales”
Leadership is “bad signal to the market”
Ahead of the 4/7 Seoul-Busan mayoral by-election, the “temporary reduction of capital gains tax for multi-homed people” card is being discussed in earnest within the Democratic Party. The government currently levies a tax of up to 62% when multi-homed people sell their homes, and the tax rate will rise to 72% from June. Since such a heavy transfer tax policy has created a phenomenon of’locked-in for sale’, rather it is encouraging house prices to rise, a plan to temporarily reduce the tax by 30-40% is raising its head. However, the Democratic Party’s leadership is struggling, saying, “It could give the wrong signal to the real estate market.”
Congressman Jin-pyo Kim and Byeong-wook Kim, “Let’s cut the transfer tax and open it to the retirement of multi-homed people”
Kim Jin-pyo, a Democratic Party member. yunhap news
Rep. Kim Jin-pyo (5th line, Suwon-mu, Gyeonggi-do), head of the Democratic Party’s emergency economic countermeasures, recently told the party leadership, such as Lee Nak-yeon and Kim Tae-nyeon, who were in the hospital. It was confirmed on the 10th that a policy proposal was submitted. Rep. Kim Byung-wook (Jae-election, Seongnam Bundang-eul, Gyeonggi-do), a Democratic Party secretary of the National Assembly’s Political Affairs Committee, will soon propose a plan to reduce (tax credit) 30-40% of the transfer tax only to multi-homed people who sold their homes before the middle of the transfer tax (June). It was known.
They cited excessive transfer tax burden as one of the reasons why house prices jump even in various government real estate regulations. Currently, when selling houses in areas subject to adjustment, such as Seoul, a transfer tax of up to 52% is imposed on two houses and 62% on three or more houses. In addition, 10 percentage points will be added from June 1st according to last year’s ‘7/10 real estate measures’. For more than 3 houses, 72% of the gains on the transfer must be released. As a result, multi-homed people donate or’hold up’ their homes rather than sell them. Eventually, the sale of the market declines, leading to higher home prices.
An official from the Democratic Party who sympathized with the relief of the transfer tax said, “Minister Byeon Chang-heum will announce a supply plan before the Lunar New Year, but it will take at least 3 to 4 years to move in. It must be done so that it has an immediate effect of supply expansion.” Rep. Kim Byeong-wook also said, “To solve the real estate problem blocked by’locked up for sale’, we need wisdom to solve the problem with market logic rather than isolating multi-homed people from a moral point of view.”
In June of last year, the transfer tax’limited time’ was suspended…
The photo shows a downtown apartment as viewed from Namsan, Seoul on the 7th. yunhap news
There is already a precedent. The government announced ’12/16 real estate countermeasures’ in 2019 and delayed the heavy transfer tax until June 30, 2020. During this period, when multi-homeowners sell their houses for more than 10 years in the area subject to adjustment, only the basic tax rate (6~42%) was applied to the gains on the transfer. At the time, many houses in Gangnam, feeling burdened by the government’s steep increase in ownership tax (deposit tax + property tax), temporarily lowered the price of a house in Seoul as they released a quick sale that lowered their asking price by hundreds of millions of dollars to sell their house by the end of June. Kim Gyeong-gyu, head of the Korea Investment & Securities Institute for Asset Succession said, “If the heavy-duty measures are postponed altogether, as in the first half of last year, there will surely be an effect on the market for multi-homed sales. On the other hand, Kwon Dae-jung, a professor at Myongji University, said, “A lot of multi-homed people have already finished donating, so the effect of easing the transfer tax will not be great.”
Former leadership to draw a line on transfer tax reduction, “can give wrong signal”
According to the Democratic Party and government authorities on the 10th, plans to ease the policy on the transfer tax for multi-homed people in the area subject to adjustment from June this year are being carefully reviewed inside the party. The photo shows a real estate agency in Songpa-gu, Seoul on the 10th. yunhap news
The Democratic Party’s leadership is in the position that “there are no discussions or plans to review” the allegations of easing the transfer tax. This is because we believe that it could give a false signal to the real estate market if it is shifted toward easing before the additional transfer tax in June and measures take effect in earnest. In fact, it was confirmed that the plan to ease the transfer tax has not been discussed at all in the recent high-level party-government consultation.
The key Democratic Party official said, “It is not an issue to be easily discussed as the stance of the party’suppression of speculative demand’ can be shaken as soon as the easing card is taken out. Rather, it is understood that the leadership has not been able to withstand the recent tax burden and multi-homed people have begun to sell their products. I am doing it.” In a call with the Hankook Ilbo, Lee Nak-yeon also said, “It is true that Congressman Jin-pyo Kim suggested a policy to ease the transfer tax, but the principle of real estate policy may be broken, so we are not considering it.” However, on the other hand, on the same day, when Deputy Prime Minister Hong Nam-ki said, “It is also important to let those who have three or four to sell their products is an important supply policy,” an interpretation of “the meaning of opening a retreat through transfer tax and easing.” The debate on the issue seems to continue.
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