Tax Breaks for Home Buyers in Korea

April 2, 2013 Taxation in South Korea

Tower of GoldSEOUL – Korea hopes to revive the its flagging housing market by making it easier for first time buyers to purchase their own property.

At a press conference on April 1st held by representatives of the Ministry of Land, Infrastructure and Transport of Korea it was announced that over the course of this year new tax changes will be implemented in order to boost activity in the country’s slumping housing market, which, at the moment, has hit its lowest point since 2006.

The central point of focus for the government’s new push is to remove taxes on the purchase of property for first time buyers earning less than KRW 60 million (approx. USD 54 000), if the value of the house is less than 10 times their own annual salary.

It was also indicated that individuals who buy a house worth less than KRW 900 million (approx. USD 810 000) in the next five years will not be liable to pay capital gains tax if they sell the property again within a predetermined amount of time.

As part of the plans to boost the property market, the government also revealed that it has scrapped its earlier plan of enacting a raised rate of capital gains earned by investors.

By announcing the eased tax rules, Korea is breaking away from the trend set in neighboring countries which are raising taxes in order to quell and control rapidly rising housing prices and soaring demand for property.

Photo by greenjr2