Gov′t to offer 4-to-6 month grace period before ending tax benefits for multiple homeowners

▲ Apartment buildings under construction in Seoul (Yonhap)

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Gov't to offer 4-to-6 month grace period before ending tax benefits for multiple homeowners

By Kim Han-joo

SEOUL, Feb. 12 (Yonhap) -- The government will grant a grace period of four to six months for owners of multiple homes ahead of the planned end of a temporary exemption from heavy capital gains taxes for multiple homeowners, the finance ministry said Thursday.

The temporary exemption will still end as scheduled on May 9, as President Lee Jae Myung has emphasized the need to stabilize rising housing prices and curb real estate speculation, particularly in the greater Seoul area.

The policy has prompted owners of multiple properties to sell their homes to avoid hefty taxes.

"To ensure policy predictability and credibility, the exemption will end as originally scheduled. At the same time, supplementary measures have been prepared to improve consistency between systems and minimize public inconvenience," the Ministry of Economy and Finance said in a statement.

Under the measure, a four-month grace period will be given for properties in Seoul's upscale Gangnam and Yongsan districts and up to six months for newly designated speculative zones, the ministry said. The grace period will apply to cases in which final payments are completed or ownership registration is finalized within the specified time frame.

For homes currently occupied by tenants, the government will temporarily ease owner-occupancy requirements under the land transaction permit system, the ministry said.

Many rental properties in South Korea operate under the "jeonse" system, in which tenants provide a large lump-sum deposit that is returned in full at the end of a minimum two-year lease.

Currently, capital gains taxes on real estate sales range from 6 to 45 percent. Owners of two homes in designated speculative zones face an additional 20 percentage points, while those owning three homes are subject to a 30 percentage-point surcharge on top of the base rate.

Housing prices are one of the Lee administration's key policy issues. Lee has pledged to stabilize the housing market, saying soaring home prices are forcing young people to abandon plans for marriage and childbirth.

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