The government decided during a Cabinet meeting today (Sept. 1) to maintain the basic comprehensive real estate holding tax deduction for non-resident single-home owners at the current 1.2 billion won based on officially assessed prices.

This decision comes 29 days after the government announced a plan to reduce it to 900 million won in the tax reform proposals released on August 3, reverting to the original level following public feedback and inter-ministerial consultations.

Regarding the tax burden ceiling, the initial plan to raise it to 200% has been revised to keep it at the current 150%.

The Ministry of Economy and Finance announced that 11 tax law amendment bills, including the Comprehensive Real Estate Holding Tax Act and the Income Tax Act containing these provisions, were finalized during the Cabinet meeting.

The bills are scheduled to be submitted to the National Assembly by September 3 for review during the regular parliamentary session.

Through today's revised plan, the government raised the basic comprehensive real estate holding tax deduction for non-resident households with a single home from 900 million won in the previous government proposal back to 1.2 billion won.

In other words, the current basic deduction of 1.2 billion won from before the tax system reform will be maintained.

For non-resident married couples who jointly own a single home, the deduction was revised upward from 400 million won each to 600 million won each.

Combined for both spouses, this amounts to 1.2 billion won.

For actual resident single-home owners, the basic deduction will be increased from 1.2 billion won to 1.4 billion won, as outlined in the initial reform proposal.

For resident married couples with joint ownership, the deduction of 900 million won each will be maintained.

The Ministry of Economy and Finance explained the reason for the revision, stating that it adjusts the comprehensive real estate holding tax burden for single-home owners and married couples with joint ownership.

The tax burden ceilings for housing and land comprehensive real estate holding taxes will be maintained at 150%, reversing the previous government proposal to raise them from 150% to 200%.

The government had previously emphasized the "actual residency principle," differentiating the tax law amendments by increasing the basic deduction for actual residents while reducing it for non-residents.

However, following the announcement of the tax reform package, arguments were raised that the measure imposed an overly harsh tax burden on non-residents, given South Korea's housing reality where frequent relocations and the jeonse (lump-sum housing deposit) system are widespread.

Particularly after the election of Democratic Party leader Kim Min-seok, demands grew stronger within the political sphere to ease tax discrepancies based on actual residency.

The argument was that distinctions should not be made between residents and non-residents.

Consequently, following inter-ministerial consultations (August 4–14), legislative notice (August 4–20), and a vice-ministerial meeting on August 27, the government finalized the revised proposal during today's Cabinet meeting.