Yoon offers tax cut, more jeonse loans in 1st housing measures
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Loading... - Asmara Lubis
- 21 Jun 2022
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The Yoon Suk-yeol administration on Tuesday unveiled the first batch of its real estate measures that offer lowering tax burdens for first-time homeowners and expanding tax deductions for tenants, taking the first step to realize its campaign pledge to “normalize” the housing market.
The government will come up with detailed measures for the supply of 2.5 million homes and more no later than August.
At a joint briefing, First Vice Minister of Economy and Finance Bang Ki-sun said the measures are aimed at “normalization” of the market, rather than price stabilization. He said home prices have been stabilized amid rising interest rates and policies inducing multiple home owners’ active selling.
“(In past years), regulations-centered policies and imbalance between demand and supply in major regions had distorted the real estate market,” he said.
The government also vowed to lift the presale price cap imposed on private apartments and offer up to 180 million won ($139,211) per loan for those who opt for new “jeonse” contracts before their four-year contracts expire. The range of a jeonse loan is currently limited to 120 million won. Jeonse is a housing lease system unique to Korea whereby tenants pay a lump-sum deposit instead of monthly rent on a two-year contract.
With the eased regulation, owners of one home who took out mortgages at speculation-prone districts to buy a new home are allowed to continue to own their previous home for up to two years, officials said. The former administration obliged them to sell their previous homes within six months.
Though they will temporarily become two-home owners in this arrangement, the taxation authority would not levy aggravated taxes on them during the two-year grace period. Officials said this will also be beneficial in terms of protecting the tenants’ rights by giving sufficient time for movement.
To ease the tax burden, first-time home buyers will enjoy an exemption from the property acquisition tax up to 2 million won, regardless of their annual income and property price. They will only be subject to taxes exceeding 2 million won in proportion to their property price. Read More...
