Since the government announced a real estate tax reform plan on the 3rd aimed at strengthening tax burdens on ultra-high-value homes and non-resident single-homeowners, the fallout has been growing increasingly severe. At the Legislation Participation Center of the Office for Government Policy Legislation, over 4,000 legislative opinions have piled up, ranging from opposition to increased tax burdens to requests to expand exceptions for non-residents. Even among ruling party lawmakers centered in Seoul and other metropolitan areas, voices demanding amendments and improvements are emerging.
The core of this reform plan is the gradual unification of the tax rate system from a "number-of-homes" basis to a "property-value" basis. In addition, the basic deduction amount, fair market value ratio, and tax rates will all be revised to increase the comprehensive real estate tax levied on high-value homes and non-resident single-homeowners. Particularly, by converting the long-term holding special deduction into a long-term residence income deduction, the tax burden on non-resident single-homeowners has increased significantly. Consequently, over 1,700 legislative opinions have been poured in regarding only the Income Tax Act amendment bill. Opinions such as "This is no different from a modern-day Goryeojang (a contract forcing someone to sell their home and pay taxes or suffer until death), telling elderly people who lived diligently in one house for years that they must either sell their homes, pay taxes, and get kicked out, or endure paying taxes until they die" have even emerged.
Especially as the period of residence has become a crucial criterion for calculating capital gains tax and comprehensive real estate tax, there are many voices calling for an expansion of exception clauses for those who cannot reside in their homes due to unavoidable reasons. The government's plan recognizes up to three years of non-residence periods as residence periods when moving due to reasons such as job transfer, school enrollment, or overseas assignment from a home lived in for over one year. One office worker stated, "I was allocated a newly built apartment and lived there for five months before suddenly being assigned overseas; I went abroad and returned," requesting exceptions, and opinions urging consideration of individual circumstances have poured in.
Extensive revisions to this reform plan, including real estate taxes, are inevitable. There must be no harm caused by labeling elderly retirees without income or honest genuine buyers as speculators. At the same time, the practice of releasing tax policies in a "take it or leave it" manner must change. Last year, the government announced plans to strengthen the major shareholder threshold for capital gains tax on listed stocks from 5 billion won per stock to 1 billion won, but when controversy continued and President Lee Jae-myung stated that there was "no need to insist," the plan disappeared as if it never existed. There is no need to mention further how much greater the impact of real estate tax reform on the market would be. The government and ruling party must seriously consider all opinions raised by the 20th, when the legislative notice period ends, and conduct a comprehensive review of the entire framework, including non-residence requirements.
in OPINION
