Key points include temporary second home and inherited home, ‘Debate over reform side effects inevitable’, ‘The ruling and opposition parties have formed a consensus on easing the comprehensive real estate tax (CRET) for “actual residence single homeowners.” The Democratic Party of Korea acknowledged the need for a redesign of the CRET at the leadership level, while the People Power Party proposed preparing a CRET reform plan within this year. However, discussions on regulations that have raised concerns about side effects of the CRIT, such as “temporary second home tax burden” and “tax benefits for landlords,” require alignment of positions between the ruling and opposition parties.’
‘According to political circles on the 29th, discussions on CRIT reform in the 22nd National Assembly are expected to intensify. Recently, the Democratic Party of Korea showed a proactive shift in its position on CRIT reform. The party began discussing CRIT reform proposals at the policy committee level. It was reported that the party is focusing on discussing easing tax burdens rather than abolishing the CRIT for single homeowners, which has been suggested in some quarters within the party.’
‘The People Power Party also positively evaluates the Democratic Party’s change in stance and expressed willingness to cooperate in formulating a reform plan. The party also plans to consider improvement measures to alleviate the “side effects of the CRIT” along with easing the tax burdens, acknowledging the perception that abolishing the CRIT for single homeowners poses problems in terms of equity.’
‘If the ruling and opposition parties proceed with substantial discussions on CRIT reform, it is likely that measures to increase the basic deduction amount for actual residence single homeowners will be considered. This would alleviate additional CRIT burdens for actual residence single homeowners by reflecting the increase in the publicly assessed housing price criteria. Under the current law, individuals are taxed on the portion exceeding the basic deduction amount of 12 billion won for single homeowners and 9 billion won for others based on the total publicly assessed housing prices they own.’
‘Debates between the ruling and opposition parties are expected regarding how to improve issues such as distortion of the real estate market and tax equity stemming from the CRIT implemented since the Roh Moo-hyun administration in 2005.’
‘Criticism of the CRIT burden on temporary second homeowners continues unabated. There is a debate on whether alternative acquisitions should be included in the tax base. Currently, single homeowners with one home are burdened with excessive CRIT until they transfer their existing home after acquiring a new home for relocation purposes.’
‘There is a widespread recognition that a provision similar to the one in transfer income tax and acquisition tax, which excludes excessive taxation for temporary alternative acquisitions, is needed for the CRIT as well. Therefore, there is a need to coordinate opinions on adding “temporary second homes” to the special exemption targets when calculating the CRIT base.’
‘Realigning the CRIT tax base for jointly owned portions of homes is also necessary. For example, when siblings jointly own a home inherited from their parents, it is currently treated as jointly owned by each individual and subject to CRIT as multiple homeowners, which raises the need to distinguish and improve the situation when calculating the CRIT for inherited homes.’
‘Relaxing the conditions for “combined exemption for rental homes” is another provision that requires a compromise between the ruling and opposition parties. Many criticize the sudden increase in tax burdens due to rental property owners’ homes being factored into the CRIT base. A contentious issue between the ruling and opposition parties is expected regarding whether to reduce tax benefits for rental property owners. The People Power Party holds the view that reducing tax benefits for rental property owners under the Moon Jae-in administration has led to a decline in the rental market.’
‘Jeong Jeom-sik, the chairman of the People Power Party’s Policy Committee, stated, “We propose to the opposition parties to comprehensively review the real estate tax system distorted by the CRIT and reform it in line with tax principles,” and added, “We hope that the ruling and opposition parties will put their heads together, gather wisdom, and formulate a plan to completely reform the real estate tax system in this year’s regular session of the National Assembly.” Reporter Lee Seung-hwan’