S. Korea to stabilize rental housing market through tax cuts, other measures
Updated: 2022-06-21 15:58:04 KST
The Yoon Suk-yeol administration's first package of measures on the housing market aims to stabilize the cost of rent.
Finance Minister Choo Kyung-ho, in his first government meeting on the property market on Tuesday, said, first of all, there will be tax incentives to encourage housing contracts to be renewed.
"Landlords who voluntarily raise rents by less than 5 percent will be exempt from capital gains tax when selling their homes if they own just one."
Also when selling their property, landlords who've raised rents by less than 5 percent will be entitled to the special tax reduction for long-term home owners, even if they never lived in the home themselves for more than two years.
The plan also includes help for tenants using Korea's unique system of "jeonse," where the tenant gives the landlord a huge lump-sum deposit instead of paying monthly rent the deposit for which is often borrowed from a bank.
"Considering the rise in prices of 'jeonse' deposits over the last four years, the government will increase the maximum amount of the deposits tenants can borrow."
Those repaying such loans will be able to deduct more of it on their taxes, with the maximum deduction to be raised from the current three million won to four million won, or about 3-thousand U.S. dollars.
For tenants paying monthly rent, their deduction will be raised from the current 12 percent of their rent to a maximum of 15 percent.
Also, to get more people on the property ladder, the government will exempt first-time buyers from up to 2 million won, or about 15-hundred U.S. dollars, of acquisition tax.
The government aims to come up with reforms on comprehensive real estate tax by next month and then by mid-August, it will lay out detailed plans on how to supply 2.5 million more homes.
Eum Ji-young, Arirang News.