S.Korea decides to raise taxes for multiple home owners

SEOUL, July 10 (Xinhua) -- The South Korean government decided Friday to raise taxes for multiple home owners sharply in a bid to curb housing prices.

According to the Ministry of Economy and Finance, the property acquisition tax will be increased to as high as 12 percent for people who own at least three homes and companies that possess multiple homes.

People who have two homes will be required to pay 8 percent in acquisition tax. It was sharply up from the previous maximum rate of 4 percent for individuals who own more than four homes.

The home ownership tax will be lifted from the current range of 0.6 percent to 3.2 percent to a range of 1.2 percent to 6.0 percent for those who own at least three homes.

All the companies that possess multiple homes will be required to pay a 6-percent ownership tax.

Those who have multiple homes worth more than 3 billion won (2.5 million U.S. dollars) will be required to pay 38 million won (31,550 U.S. dollars) or so per year in the property ownership tax, while those with several homes of 5 billion won (4.2 million U.S. dollars) should face the ownership tax of about 100 million won (83,000 U.S. dollars).

Those are a bit more than double the amount that multiple home owners paid in the ownership tax last year.

Capital gains tax will be raised to as high as 70 percent for those who buy and sell a home within a year beginning 2021, while the tax rate for those who buy and sell a home within two years will be hiked to 60 percent.

Minister of Economy and Finance Hong Nam-ki, who doubles as deputy prime minister for economic affairs, told a press briefing that multiple and short-term home owners could not actually get any speculative gains with a sharp hike in all of the acquisition, ownership and capital gains taxes.

The stronger-than-ever measures to curb housing prices came as people rushed to speculate in the property market with a record-low borrowing cost and an ample liquidity.

The country's central bank cut its key rate by 25 basis points to an all-time low of 0.50 percent in May, after slashing the rate by 50 basis points in March to prop up the economy amid growing worry about an economic fallout from the COVID-19 outbreak.

For first-home home buyers, the government planned to lower tax burden and loan standard.

The plan that requires the revision of tax code was submitted to the National Assembly earlier in the day, with an aim of passing it through the parliament within this month.