Government prepares to expand owner-occupancy exemptions to ease home sales

The government is moving to expand exemptions to the owner-occupancy requirement to help homeowners who are struggling to sell their properties on time.

Lee Hyeong-il, first vice minister of the Ministry of Economy and Finance, said Thursday on Cheong Wa Dae's online policy YouTube program "Fact Mill" that the government is "currently preparing to further expand the owner-occupancy requirement exemption," adding that it would "make every effort to ensure there are no inconveniences in selling homes."

Lee said some homeowners have told him they want to sell because of the property tax burden, but are finding it difficult to do so — either because their homes fall under the land-transaction permit zone, making it hard to find a buyer who will actually live there, or because a tenant is currently occupying the property.

He cited the government's existing measure — a temporary exemption through the end of this year allowing buyers of homes with sitting tenants to defer the owner-occupancy requirement until the tenant's current lease expires — as the backdrop for the decision to review a broader expansion, saying "there are cases where even that is not enough."

On criticism that the real estate tax reform amounts to a tax hike, Lee drew a line, saying the overhaul was "not aimed at increasing tax revenue."

He said the intent was "to establish a housing market centered on actual residence, enhance fair and equitable taxation, and build a sustainable real estate tax system."

Lee added that all taxes collected this way would be transferred to local governments as real estate grant tax for purposes such as balanced regional development, and that "the central government will absolutely not use any of the increased revenue."

He reiterated that the goal was "to establish a housing market centered on actual residence, enhance fair and equitable taxation, and build a sustainable real estate tax system."

Lee rebuffed suggestions that a provision in the tax reform package — offering capital gains tax relief to single-home owners aged 65 or older who sell their Greater Seoul property and relocate outside the metropolitan area — was designed to push elderly residents out of the capital region. "This is absolutely not about inducing relocation," he said.

He said there had been "a great deal of opinion that those who retire and move outside the metropolitan area deserve consideration," and that the government had accepted that view. "These individuals are making a difficult decision," he added.