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Seoul unveils tougher measures to cool down property prices

Infra News - Published on Mon, 17 Sep 2018

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Yonhap quoted South Korea's government as saying that owners of high-value houses and multiple homes will face tougher taxes than originally planned as it strives to rein in soaring housing prices. Over the past year, the Moon Jae-in government has unveiled a series of measures to curb housing prices that have had little impact on the market. Alarmed by the fastest gain in a decade in housing prices in Seoul, the government said it would further raise the tax burden on owners of high-priced houses and multiple homes and increase housing supply in Seoul and adjacent areas. Under the new measures, the finance ministry said it would raise the so-called comprehensive real estate tax rate for properties valued at between KRW 300 million and KRW 600 million to 0.7 percent, higher than the originally proposed 0.5 percent. The rate for a property priced at between KRW 600 million and KRW 1.2 billion will be raised by between 0.25 percentage point and 0.55 percentage point, with the maximum rate to be raised to a maximum 3.2 percent from the current 2 percent.

The ministry said that it will seek to raise the taxable rate of a property, which is now 80 percent of the government-set value. The rate should climb to 100 percent by 2022, compared with the originally proposed 90 percent by 2020. In South Korea, the government usually taxes land and homes based on its annual assessment value instead of the actual market value.

The comprehensive real estate tax, first introduced in 2005 under late President Roh Moo-hyun, has long been controversial here. Taxation on owners of expensive houses and owners of multiple homes during the Roh administration faced a strong backlash, which in turn led to a drop in the approval rating of the left-of-center government.

The conservative Lee Myung-bak government eased the tax scheme. But the liberal Moon Jae-in government, which shares most of the economic policies of the Roh administration, has vowed to impose heavy taxes on owners of high-priced homes and multiple homes, which it claims is the main cause of soaring home prices in Asia's fourth-largest economy.

Apartment prices in the affluent Gangnam district and some other neighborhoods have jumped on hopes of reconstruction projects moving forward and ample liquidity circulating in the economy.

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Posted By : Nanda Koijam on Mon, 17 Sep 2018
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