'I left my home to care for grandchildren, aging parents' — calls grow to broaden owner-occupancy exemptions

Backlash is mounting against the government's plan to restructure real estate taxes around an owner-occupancy standard, with critics arguing it unfairly penalizes single-home owners who have no choice but to live away from their own properties. While the government has carved out exceptions for school enrollment, job changes and medical treatment, many say those categories fall short of capturing the full range of real-life circumstances — such as moving out to care for grandchildren.

As of 9:30 a.m. Monday, 2,806 public opinions had been submitted on the proposed amendment to the Comprehensive Real Estate Tax Act, which the Ministry of Finance and Economy put out for public comment on Tuesday, according to the Ministry of Government Legislation's public participation portal.

A separate income tax bill covering capital gains tax changes drew 1,781 comments. Receiving more than 1,000 public opinions on a government bill in such a short period is highly unusual.

A significant share of the submissions argued that the exemption categories the government has proposed are too narrow to accommodate the many reasons a homeowner might live away from their property.

One commenter, identified only by the surname Kim, asked that grandchild care be recognized as a valid exemption for homeowners who cannot live in their own homes.

Kim said she had been raising her daughter's child in Seongdong-gu since the grandchild's birth, standing in for her daughter who works full time. When the daughter later won a lottery allocation for an apartment in Gangdong-gu and moved there, Kim said she put her Seongsu-dong apartment — where she had lived for 20 years — up for jeonse and relocated to an adjacent building to continue caring for the grandchild. Penalizing such a situation with a tax disadvantage for non-residency, she argued, creates innocent victims and runs counter to the government's own pro-natalist policies.

Others called for exemptions to cover care-related moves within the same city or county, not just across administrative boundaries. A commenter surnamed Jang said that because of a job requiring frequent late-night work, the family needed grandparents nearby for childcare and had moved within the same city to be close to them. Jang called for the government's requirement that a homeowner relocate to a "different city or county" to be dropped or relaxed, arguing that basing a tax penalty solely on whether an administrative boundary was crossed fails to reflect the realities of how families raise children and arrange their housing.

Situations involving special education or ongoing medical treatment — where moving back to one's registered home is not immediately feasible — were also raised. One citizen said their elementary-school child, who requires special education, had spent years adapting to a current school and treatment environment, and that forcing a move to the family's owned property would disrupt the continuity of that education and care.

On the question of caring for elderly parents, commenters called for the eligibility requirements and the maximum exemption period to be brought in line with real-world circumstances.

One citizen said they were caring for parents in their 90s and asked, "Do I have to give up being a filial child because of taxes?" The commenter said they had been living near their parents for 11 years without ever moving into an apartment they had purchased, because caring for the parents came first. Since they had never lived in the property to begin with, they said, the requirement of having resided there for at least one year before qualifying for an exemption was impossible to meet, and asked for that threshold to be relaxed.

The three-year cap on the non-residency exemption period also drew criticism. One citizen caring for a mother-in-law over the age of 75 said, "Looking after a parent is not something that ends after a set period," and asked that the entire duration of co-residence for caregiving purposes be counted as qualifying residency.

Under the tax reform package, the government has proposed allowing periods of non-residency to count toward the residency requirement when calculating capital gains tax and comprehensive real estate tax liability, subject to defined exemptions.

The qualifying circumstances are: enrollment in high school or university; job changes or transfers; illness requiring at least one year of treatment or recuperation; school transfers due to school violence; overseas stays arising from school enrollment or work; and co-residence with a direct lineal ascendant aged 60 or older for caregiving purposes. The government also said tax authorities would be able to recognize other unavoidable circumstances on a case-by-case basis after examining the specific facts.

However, to prevent abuse, the government said the exemption would apply only when a homeowner had lived in their own property for at least one year before relocating to a different city or county for an unavoidable reason, and that the non-residency period credited as qualifying residency would be capped at three years.

With requests to expand the exemptions coming in steadily during the public comment period, a key question in drafting the implementing regulations will be how broadly to define unavoidable non-residency — whether to include childcare, eldercare, special education and other circumstances not currently listed. How flexibly the government applies the requirements — the cross-district relocation rule, the one-year prior-residency threshold and the three-year cap — to individual situations will also be closely watched.

The government has signaled it is open to refining the exemption categories and eligibility conditions. Deputy Prime Minister Koo Yun-cheol, appearing on MBC Radio recently, said the government would "look at unavoidable exemptions from the owner-occupancy requirement — such as school enrollment, job changes and illness — as much as possible from the public's perspective," and went on to say it planned to "listen further to public opinion and review the matter as flexibly as possible" when revising the implementing regulations after the bill passes.

Koo also addressed the three-year cap, saying, "We set three years as the basic standard, but if there are truly unavoidable exceptions, we will listen to public opinion and take another look."

Separately, the government is also reviewing follow-up measures to improve policy coherence between the tax reform and the land transaction permit system. One option under consideration is extending a special provision that temporarily waives the owner-occupancy requirement for homes in land transaction permit zones — a provision currently set to expire at the end of this year.

Under the current special provision, anchored to May 12 of this year, when a person with no home purchases a property already under a lease, the buyer's owner-occupancy obligation is deferred — taking into account the remaining term of the existing lease contract — until as late as May 11, 2028. The provision applies on a temporary basis to land transaction permit applications received through Dec. 31 of this year. The government believes that if the provision expires at year-end, transactions involving tenanted homes will become difficult starting next year, potentially limiting the supply of properties coming to market that the tax reform is meant to unlock, and is therefore examining an extension of the deadline.