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 expand the recognition of actual residence for "non-resident single-home owners" during their discussions on revising real estate tax policies.

Park Sungjoon, Chief Spokesperson of the Democratic Party of Korea, stated during a briefing following the high-level consultation meeting at the National Assembly on the same day, "There is a shared understanding between the party and the government regarding various suggestions, including expanding the recognition of residence for those who are non-residents due to unavoidable reasons." Regarding the planned revision of the Comprehensive Real Estate Tax (commonly known as "Jongbu tax"), he added, "The Democratic Party strongly requested that there be no distinction between resident and non-resident single-home owners."

Yonhap News Agency

This move to ease the requirements for non-resident single-home owners is seen as an attempt to soothe the negative public sentiment toward real estate policies that emerged after the government’s initial proposal. The recently announced government plan for real estate tax reform focuses on revising the tax system to prioritize actual residents, targeting high-value and non-resident properties. One key change is adjusting the long-term capital gains tax deduction to a "long-term residence deduction," so that the benefit depends on the actual period of residence.

The previous government plan included an exception where single-home owners who had continuously lived in their home for over one year, but then moved to another city or county for reasons such as school admission (high school or university), relocation or job transfer, medical treatment, overseas stay, or caring for parents, would be recognized as actual residents for up to three years. However, there has been ongoing demand to further broaden this scope.

With the party and government now agreeing to revise this aspect, there are expectations that reasons such as childcare or family caregiving that necessitate residing in another location will also be added as valid grounds for recognizing actual residence in the future.

After the briefing, Park, the chief spokesperson, reiterated to reporters, “The party strongly requested that there be no distinction between resident and non-resident single-home owners,” adding, “If we emphasize this point, the direction of future discussions should be reasonably predictable.” The previous government proposal had aimed to increase the basic deduction for the Jongbu tax for actual resident single-home owners from the current 1.2 billion won to 1.4 billion won, while lowering it for non-resident single-home owners to 900 million won.

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

Minseok Kim, leader of the Democratic Party of Korea, during his opening remarks at the meeting, commented on the Jongbu tax issue, saying, “In-depth deliberation is needed on the revision that would reduce the basic Jongbu tax deduction for non-resident single-home owners from 1.2 billion won to 900 million won and increase the Jongbu tax cap to 200%.”

Park also noted that there were negotiations regarding the tax burden cap and the fair market value ratio. He stated, “There was discussion on changes from the current 150% tax burden cap to 200% going forward, as well as on setting the fair market value ratio to either 60% or 70%.” However, he added, “Since these matters have not yet been finalized, I will comment further at a later time.”

Going forward, the party and government plan to continue discussions and draft a revised tax proposal. Park, the chief spokesperson, said, “The revised tax proposal is scheduled to be reported at the Cabinet meeting on September 1 and will be sent to the National Assembly on September 3. Prior to that, it is preferable for the party and government to reach a consensus and submit a revised proposal to the National Assembly. We need to settle this direction by next week.”

The party and government also plan to accelerate housing supply by transferring the authority to approve small-scale redevelopment and reconstruction projects of 500 units or fewer to the heads of local governments. Park stated, “We will improve the system so that the heads of local governments can have authority over redevelopment and reconstruction of 500 units or fewer, reflecting the collective requests of Seoul’s district mayors. We will pursue related legislation in the National Assembly.” He also noted, “All 25 district mayors in Seoul reportedly support this transfer of authority,” and projected, “If local government heads are given responsibility for redevelopment and reconstruction of 500 units or fewer, it is likely that such permissions will also be extended to private redevelopment and reconstruction projects.”

During the meeting, the use of the land at Yongsan Park for expanding housing supply was also discussed. However, Park, the chief spokesperson, clarified, “No final decision has been made on how to proceed with this.”

Meanwhile, the party and government agreed to develop a legislative strategy for the upcoming regular session of the National Assembly in September to facilitate swift passage of key livelihood and reform bills, as well as legislation on the "Three Mega Projects" and other major government priority agendas. Park affirmed, “We plan to focus our legislative capacity to ensure that livelihood and reform bills, along with related legislation, are passed within this year in coordination with the schedule of the regular session and budget deliberations.”

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