[Tax Law in Focus] Government, Ruling Party Differ on "Real Estate Tax Law"; Opposition Also Calls for Changes to Family Business Inheritance Rules

Disagreement over 1.2 Billion Won Deduction for Nonresident Single-Home Owners
Some Consensus on Reducing the Long-Term Holding Special Deduction
Opposition Also Raises Concerns Over Uniform Taxation to Curb Stock Price Suppression

Differences between the ruling and opposition parties over the government’s real estate tax reform are coming to light ahead of the National Assembly’s review of the tax revision bill. Disagreements between the government and the ruling party have also surfaced. The Democratic Party of Korea is calling for a review of the government’s proposals, including differential taxation of the comprehensive real estate holding tax and an increase in the fair market value ratio, while the People Power Party appears to be criticizing the direction of the reform itself. Calls have also emerged for supplementary measures, including changes to the family business inheritance deduction and the domestic production tax credit.

Yonhap News Agency

Ruling Party, Opposition and Government at Odds over Real Estate Tax Reform

Rep. Oh Ki-hyung of the Democratic Party of Korea said at the National Assembly Budget Office’s “2026 Tax Revision Bill Forum” on November 9, “If the focus is on ownership, is it appropriate to distinguish between residents and nonresidents?” Under the government’s proposal, the basic deduction for residents who own one home would rise to 1.4 billion won, while the deduction for nonresidents who own one home would be 1.2 billion won. Earlier, Democratic Party Secretary-General Han Jeong-ae also conveyed her opposition to differential treatment at a high-level government-ruling party consultative meeting on November 8. Questions were also raised about an increase in the fair market value ratio. The government plans to raise the current 60% ratio to 70% for owners of one home and others, and gradually to as high as 80% for some owners of multiple homes.

Differences in opinion are also emerging within the ruling party. Rep. Park Joo-min of the Democratic Party said on SBS radio’s “Kim Tae-hyun’s Political Show” on November 10, “It is right to take a cautious approach to easing the burden of the comprehensive real estate holding tax.” Seoul-area lawmakers are expected to further coordinate their views on the tax reform this week.

The ruling party and the government have reached some measure of agreement on reducing the long-term holding special deduction for capital gains tax. The government plans to shift the basis for the deduction from the ownership period to the residence period and introduce a deduction limit. Rep. Oh pointed to the excessive benefits for high-priced homes, saying, “Isn’t some degree of adjustment inevitable?” He also noted, however, the need to take long-term ownership into account.

By contrast, the People Power Party criticized the government’s overall approach to tax reform. At the same forum, Rep. Bae Jun-young of the People Power Party said, “Tax policy is economic policy, not ideological policy,” and argued that the government’s changes to the comprehensive real estate holding tax and capital gains tax had increased instability in the housing market.

Calls for Changes to Family Business Inheritance and Domestic Production Tax Credits

Concerns and calls for supplementary measures were raised by the opposition regarding changes to the family business inheritance deduction and the domestic production tax credit. The government has narrowed the scope of businesses eligible for the family business inheritance deduction and revised its requirements. Rep. Bae called for a review, saying the changes “will cause considerable confusion for businesses that had been planning a stable succession and operation.”

Regarding the domestic production tax credit, Rep. Bae said, “The eligible products and the standard credit amount, among other details, need to be specified in law.” The newly introduced credit is designed to provide tax benefits to companies that produce and sell goods directly in Korea.

On the government’s move to establish tax criteria, including requirements for a low price-to-book ratio (PBR), as a measure to prevent stock price suppression, the ruling party called for supplementary legislation to be pursued alongside the proposal, while the opposition expressed concern about uniform taxation.

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