Tax Reform Bill Finalized: 'Reversal of Deduction Cut to 900 Million Won, 150% Cap Maintained'... Stock Price Suppression Excluded (Comprehensive)

On September 1, the government decided in a Cabinet meeting to restore the basic tax deduction for non-resident single-home owners regarding the comprehensive real estate holding tax from 900 million won back to 1.2 billion won. This reverses the policy announced about a month ago, on August 3, when the government said it would lower the deduction to 900 million won as part of its tax reform proposal. The plan to raise the cap on comprehensive real estate tax liability to 200% has also been revised; it will remain at the current level of 150%.

As for the improvement of the valuation method for listed stocks, which is related to efforts to dampen stock prices, this will be pursued through an amendment to enforcement regulations rather than the law itself. The final plan is expected to be drafted following further parliamentary discussion.

Yonhap News Agency

The Ministry of Economy and Finance announced that it approved 11 tax law amendment bills containing these measures at a Cabinet meeting presided over by President Lee Jaemyung that day. The government will submit the finalized 2026 tax reform plan to the National Assembly by October 3. The revision will take effect after deliberation during the regular session of the National Assembly.

According to the revised proposal announced that day, the basic deduction on comprehensive real estate holding tax for non-resident single-home owners will be maintained at 1.2 billion won, the same level as before the earlier proposal, rather than being reduced to 900 million won as originally announced.

The issue regarding the total deduction varying depending on whether a resident single-home is owned in a sole or joint (spousal) name has also been resolved. For non-resident couples who jointly own one home, the deduction per person has been raised from the previous 400 million won each to 600 million won each, totaling 1.2 billion won for the couple.

For resident single-home owners, the basic deduction will be raised from 1.2 billion won to 1.4 billion won in accordance with the earlier reform plan. For resident couples who jointly own a home, the deduction per person will remain at 900 million won. The Ministry of Economy and Finance stated, "We are adjusting the comprehensive real estate holding tax burden for single-home households and couples who jointly own one home."

The maximum tax burden cap for both the home and land portions of the comprehensive real estate holding tax, which the government had planned to raise from 150% to 200%, will instead remain at 150%. While the government had previously emphasized the principle of actual residence by raising the deduction for owner-occupied homes and decreasing it for non-residents, there had been calls even from within the ruling party that applying different tax rules based on residency status was unfair. On August 23, a high-level meeting of government and the ruling party also asked the administration to refrain from distinguishing between resident and non-resident single-home owners.

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