Government Backs Down on Tax Reform: Key Revisions Explained

[Anchor]

The government has ultimately revised the tax reform proposal it announced last month. First, it partially withdrew plans to tighten the comprehensive real estate holding tax on single-home owners who do not reside in their properties. The basic deduction will be reverted to the current 120 million won from the initially proposed 900 million won, while the tax burden ceiling and deductions for couples with joint ownership have also been eased compared to the original plan. The government initially tried to stick to its original plan under the banner of favoring actual residents, but backed down just a month later amid mounting backlash.

For our first news, Reporter Lee Seong-hoon has the details.

[Reporter]

The government has decided to maintain the basic comprehensive real estate holding tax deduction for non-resident single-home owners at the current 1.2 billion won.

This comes 29 days after it announced a plan on August 3 to lower it to 900 million won.

[Kang Yu-jung / Senior Spokesperson for the Presidential Office: To narrow the gap in tax burdens between resident and non-resident single-home owners, the basic deduction for resident single-home owners will be raised from 1.2 billion won to 1.4 billion won, while the basic deduction for non-resident single-home owners will be maintained at the current 1.2 billion won.]

The plan to raise the ceiling on the comprehensive real estate holding tax burden from 150 percent of the previous year's property tax to 200 percent has also been withdrawn, keeping it at the current 150 percent.

For non-resident single homes with joint ownership by a married couple, the deduction, which had been reduced to 400 million won per person, has been raised to 600 million won, bringing the total joint deduction for couples to 1.2 billion won.

However, this is still less than the current joint deduction limit of 1.8 billion won.

Consequently, next year's property tax burden will also be reduced compared to the initial reform proposal.

Assuming a non-resident single-home apartment in Seocho-gu, Seoul, with an officially assessed value of 3.5 billion won, the property tax for a single-name owner comes to 26.41 million won, which is a 6.77 million won reduction from the original proposal.

For jointly owned properties by a couple, the tax is calculated to decrease by about 5 million won, from 21.84 million won to 16.84 million won.

[Woo Byeong-tak / Senior Specialist at Shinhan Premier Pathfinder: Considering that the original deduction amount for a single-name owner of a single home was 1.2 billion won, this brings it back to the same level, meaning that the disadvantages for non-resident owners have been significantly eased...]

As the gap in deduction amounts between residents and non-residents has narrowed significantly from the original plan, the principle of a residency-centered overhaul, which the government had emphasized, has been largely undermined.

The government explained that the final proposal was modified to reflect opinions raised during the legislative notice and inter-ministry consultation processes.

The final proposal will be submitted to the National Assembly by the day after tomorrow (the 3rd) and will then undergo deliberation during the regular session of the National Assembly.

(Video by: Jung Sang-bo and Yoon Hyung, Video Editing by: Kim Ho-jin)
※ Please note: This article was translated by AI and may contain errors.