A real estate agency in Songpa-gu, Seoul, on Tuesday, as the government announced a tax reform plan to raise the burden on ultra-high-priced homes and single-home owners who do not live in their properties. [Yonhap]
A real estate agency in Songpa-gu, Seoul, on Tuesday, as the government announced a tax reform plan to raise the burden on ultra-high-priced homes and single-home owners who do not live in their properties. [Yonhap]

Public comments on the government's real estate tax reform plan are flooding in, ranging from opposition to higher tax burdens to demands that exemptions for owner-occupants be broadened.

The government says it will fully consider opinions submitted during the legislative notice period and actively review reasonable proposals.

According to the Ministry of Government Legislation's Public Participation Legislative Center, the proposed amendment to the Comprehensive Real Estate Tax Act — filed for legislative notice by the Ministry of Economy and Finance on Tuesday — had received 2,057 public comments as of 6 p.m. Saturday.

A proposed partial amendment to the Income Tax Act — which includes a conversion of the long-term holding special deduction into a long-term residency income deduction, along with other capital gains tax changes — drew more than 1,400 comments.

Most oppose the reform's increase in the comprehensive real estate tax burden, but a steady stream of comments also calls for improvements to the system's design.

Particularly prominent are demands that the plan more broadly recognize cases where homeowners are unable to live in their properties for unavoidable reasons.

Under the current government proposal, a single-home owner who has lived continuously in a property for at least one year may have a period of non-residency counted as residency time if they relocate to another city or county for unavoidable reasons — such as schooling, a job change or transfer, illness, a child's school transfer, an overseas stay or caring for a parent. The exemption applies for up to three years.

On top of that, commenters have asked that non-residency for childcare or family caregiving also be included as an exemption — for example, when grandparents move to the area where their adult children live to look after grandchildren, leaving their own home vacant.

The government considered including childcare-related non-residency as an exemption but held back over concerns that a broad allowance could enable gap investment — the practice of buying a home with a jeonse, a lump-sum deposit lease, while not actually living there — particularly in Seoul.

The government plan also specifies that for newly built homes acquired through redevelopment or reconstruction projects, half of the construction period will be counted as residency time.

In response, some commenters asked that long-term relocations due to remodeling work under the Housing Act be treated the same way, with part of that period also recognized as residency time.

The criteria for non-residency exemptions fall under enforcement decree revisions, and the government says it will gather broad public input before finalizing the details.

Deputy Prime Minister Koo Yun-cheol, who also serves as minister of economy and finance, said on MBC Radio on Friday that the government intends to approach the issue from the public's perspective. "For schooling, job changes, illness, school transfers, overseas stays, caring for parents — and anything else where we judge it to be unavoidable — we are trying to look at it from the people's point of view," he said. He added that after the bill passes next year, the government plans to revise the enforcement decree with further public input and "review it as flexibly as possible."

On the three-year cap, Koo said the government set three years as the baseline but would "listen to the public and review it once more if there are unavoidable exceptions." He cautioned, however, that making the exemption too broad could invite workarounds: "If we make it too wide, people may start thinking of other ways to use it."

Commenters also called for a higher basic deduction for single homes held jointly by married couples. The amendment raises the basic deduction threshold from a publicly assessed value of 1.2 billion won ($846,000) to 1.4 billion won. The separate 900 million won deduction for each spouse under joint ownership, however, remains unchanged.

Some comments also flagged that the income threshold for deferring tax payment remains too low. Under the amendment, single-home owners seeking to defer payment until they sell the property would qualify if their total salary is 80 million won or less — up from 70 million won — while the comprehensive income threshold rises from 60 million won to 70 million won.

The government has also decided to convert the long-term holding special deduction into a long-term residency income deduction, capping it at 2 billion won starting in 2028 and at 1 billion won from 2029.

In response, some existing homeowners have argued that such caps should not be applied retroactively to properties already held.

Others asked that non-apartment properties such as officetels be treated differently when determining multi-home ownership status.

The government plans to categorize and review all comments received during the legislative notice period, which runs through Aug. 20. The reform package will then go to a vice ministerial meeting on Aug. 27 and a Cabinet meeting Sept. 1 before being submitted to the regular National Assembly session by Sept. 3.


oskymoon@heraldcorp.com