Democratic Party "Long-term ownership deduction from 2023 'exclude multi-housing period'"

The Democratic Party proposes an amendment to reduce the special deduction for long-term ownership by applying the special deduction for long-term ownership of capital gains tax from 'the point in time when a multi-homeowner becomes a single homeowner'.

In addition, after the law goes into effect, if a new high-priced house is purchased with a transfer gain exceeding KRW 1.5 billion, the special deduction rate for long-term ownership will be reduced from the current 40% to a maximum of 10%.

Representative Yoo Dong-soo, secretary of the Democratic Party's Real Estate Special Committee, announced that he would propose a partial amendment to the Income Tax Act that includes such content.

Until now, when a multi-homeowner sells a house and becomes a single homeowner, the long-term holding special deduction has been applied from the time the house was acquired.

It is interpreted as the purpose of reducing the speculative demand of multi-homeowners who are aiming for short-term profits and inducing real demand for long-term ownership.

In addition, the standard for high-priced housing that is exempt from transfer tax is currently 900 million won in market price, but this standard will be raised to 1.2 billion won and the range of special deductions for long-term ownership will be reduced.

Previously, in the case of a single homeowner, a special deduction for long-term ownership of up to 80% is applied, including 40% of ownership and 40% of residence period regardless of transfer gains.

However, the amendment includes the contents of reducing the deduction rate for the holding period while maintaining the 40% deduction for the period of residence.

As a result, 40% of transfer gains of 500 million won or less are maintained at the current deduction rate. Exceeding KRW billion is reduced to 10%.

Previously, at the general assembly of the House of Representatives on June 18, the Democratic Party lifted the transfer tax exemption standard for one house per household from 900 million won to 1.2 billion won. We have decided on the transfer tax reform plan to reduce the amount of the capital gains tax.

The Democratic Party initially reviewed the proposal to apply retroactively to existing homeowners, but withdrew from applying it to those who purchase houses after 2023 in consideration of the backlash resulting from the heavy transfer tax.

The Democratic Party plans to handle the amendment to the income tax at the extraordinary National Assembly next month.