Party and Government Reach Consensus on Expanding Scope of Actual Residence Recognition... Democratic Party: "Distinction for Single-Home Owners Should Be Abolished" (Comprehensive)

"We Aim to Finalize the Revised Plan Next Week"
Attention on Whether Childcare and Family Care Will Be Recognized as Valid Residence Periods
Plan to Transfer Approval Authority for Projects with 500 Units or Fewer to Local Government Heads

On August 23, the Democratic Party of Korea and the government reached a consensus to broaden the scope of actual residence recognition for 'non-resident single-home owners' during discussions on real estate tax reform.

Park Sungjoon, chief spokesperson for the Democratic Party, said at a briefing following the high-level party-government council held at the National Assembly that "the party and the government have reached a consensus on various opinions raised regarding expanding recognition of residence for those who are non-resident due to unavoidable circumstances." Regarding the direction of the comprehensive real estate tax (commonly known as “comprehensive property tax”) reform, he added, "the Democratic Party strongly requested that there be no distinction between residential and non-residential single-home owners."

Yonhap News Agency

The decision by the party and the government to ease requirements for non-resident single-home owners is seen as a move to calm public sentiment over real estate, which had become chilly after the government’s previous proposal was announced. The key to the recently released government tax reform plan is to restructure the tax system to focus on real residents, specifically targeting ultra-high-priced and non-residential properties. The capital gain tax’s long-term holding special deduction would be changed to a "long-term residence deduction," so the deduction benefits would vary according to the actual period of residence.

The previous government proposal included an exception for single-home owners, allowing them to be recognized as "actual residents" for up to three years if they resided elsewhere for unavoidable reasons (such as attending high school or university, job relocation or transfer, medical treatment, overseas stay, or caring for parents) after living in their home for more than one consecutive year. However, there have been continued calls to further expand the scope of such recognition.

With the party and the government agreeing to supplement this provision, there are expectations that cases such as living in another area due to childcare or family care could also be recognized as actual residence going forward.

After the briefing, spokesperson Park told reporters, "Within the party, we strongly requested applying no distinction between residential and non-residential single-home owners. Placing emphasis on this, one can roughly predict how the discussion will proceed going forward." Previously, the government plan was designed to raise the comprehensive property tax exemption for actual resident single-home owners from 1.2 billion won to 1.4 billion won, while reducing it to 900 million won for non-resident single-home owners.

View of apartment-dense area in Seocho-gu, Seoul Photo by Yonhap News

Minseok Kim, leader of the Democratic Party, remarked in his opening statement at the meeting that, with regard to the comprehensive property tax issue, "deep deliberation is required regarding the tax reform proposal to adjust the basic exemption for non-resident single-home owners from 1.2 billion won to 900 million won, and to increase the cap on total property tax burden to 200%."

Spokesperson Park added that discussions were also held regarding adjustments to the tax burden cap and the fair market value ratio. He said, "We discussed raising the tax burden cap, which was previously 150%, to 200%, and whether to set the fair market value ratio at 60% or 70%. However, since nothing has been finalized, I will speak further on this later."

The party and the government plan to continue further discussions to finalize an amendment to the tax reform plan. Spokesperson Park emphasized, "(The reform plan) is scheduled to be reported to the Cabinet meeting on September 1 and to be submitted to the National Assembly on September 3. Ideally, the party and the government should work out an amendment before then so that it can be submitted smoothly to the Assembly. We need to establish a clear direction by next week."

Additionally, the party and the government are promoting a plan to hand over the permitting authority for small-scale redevelopment and reconstruction projects of 500 units or less to heads of local governments in order to accelerate housing supply. Spokesperson Park said, "We will revise the system to allow local government heads to have authority over redevelopment and reconstruction projects of 500 units or less, reflecting requests from Seoul’s district mayors, and will push the relevant bill in the National Assembly." He added, "All 25 district mayors of Seoul reportedly support this handover. If local government heads are granted this authority for projects of 500 units or less, it could also enable private redevelopment and reconstruction projects."

At this party-government council, the utilization of the Yongsan Park site to expand housing supply was also discussed. However, spokesperson Park drew a line, stating, "No final decision has been made on how to proceed."

Meanwhile, the party and the government agreed to establish a legislative strategy to quickly process key bills related to livelihood and reform, as well as the so-called "three mega-projects," in preparation for the upcoming regular session of the National Assembly in September. Spokesperson Park pledged, "We will concentrate our legislative efforts so that bills related to livelihoods, reforms, and others can be processed within the year in connection with the regular session and the review schedule for the national budget."

This content was produced with the assistance of AI translation services.