This file photo shows a bird’s eye view of a residential area in Seoul. (Yonhap)
SEOUL, Jan. 18 (Korea Bizwire) — South Korea’s finance ministry said Wednesday it plans to revamp a set of tax regulations on the property market to ease the financial burden of people amid soaring borrowing costs.
Under the plan, South Korea will allow owners of two homes topay less taxes if they dispose of one of them during an extended periodamid a slump in the home market, according to the Ministry of Economy and Finance.
Such homeowners will not be subject to heavier taxation if they offload one of the two homes within three years. The ministry earlier extended the period from one to two years in May 2022.
The government plans to extend the deadline for multiple home owners to avoid a heavier capital gains tax when they sell their properties in the speculative districts by one year until May 2024 as well.
The country also vowed to offer tax credits on monthly rents for homes valued at 400 million won (US$322,000) and below, up from the current ceiling of 300 million won, the finance ministry added.
South Korea will have the revisions approved by the Cabinet and officially announce them at the end of next month.
The latest sets of measures come in line with efforts to add vitality to the housing market hurt by the soaring borrowing costs.
Last week, the Bank of Korea raised the benchmark seven-day repo rate from 3.25 percent to 3.5 percent, the highest level since 2008.
The finance ministry said it will give tenants, who have paid deposits of more than 10 million won, access to the information of delinquent taxes of their landlords.
The latest measure is aimed at helping tenants, especially who have made “jeonse” contracts, avoid scenarios in which landlords may fail to return their deposits due to unpaid taxes.
Under South Korea’s decades-old jeonse system, tenants pay a large lump-sum deposit, known as key money, to the landlord, which is then returned at the end of the rental agreement, usually lasting two years.
During the lease period, the tenants do not pay monthly rent.
(Yonhap)
