The Democratic Party of Korea is pushing to revise the government's real estate tax reform package, demanding deregulation for single-home owners. Party leader Kim Min-seok publicly called for supplementary measures on proposed changes to the comprehensive real estate tax and capital gains tax, as the party and government prepare to begin full-scale coordination this week.
Speaking at a supreme council meeting at the National Assembly on Monday, Kim said the party would pursue "real estate and housing policies that meet the public's expectations through swift supply, stabilization of the jeonse and monthly rent market, and rational tax improvements," adding that it would "coordinate well with the government by reflecting public opinion on tax matters."
Democratic Party floor leader Han Byung-do said the senior party-government meeting held Sunday reached a consensus on "rationally supplementing the tax system so that single-home owners who were unable to live in their homes due to unavoidable circumstances do not face unjust disadvantages," stressing that "what matters now is implementation."
The Democratic Party pressed the government with concentrated demands for revisions to the tax reform plan at a senior party-government consultative meeting held Sunday at the prime minister's official Seoul residence in Samcheong-dong, Jongno-gu. The party reportedly made a strong request that the government "eliminate the very distinction between resident and non-resident status" for the comprehensive real estate tax on single-home owners.
Under the government's previously announced real estate tax reform plan, the basic deduction threshold for the comprehensive real estate tax on single-home owners — currently set at a publicly assessed value of 1.2 billion won ($867,000) regardless of residency — would be differentiated: 1.4 billion won for residents and 900 million won for non-residents.
At the meeting, Kim said that "even if the current system is maintained for the comprehensive real estate tax, non-resident single-home owners would naturally face a heavier tax burden as publicly assessed values rise," and called for "deep deliberation" on the proposed reform that would lower the basic deduction for non-resident single-home owners from 1.2 billion won to 900 million won and raise the cap on the comprehensive real estate tax burden to 200 percent.
Kim also raised the need to supplement proposed changes to the special long-term holding deduction for capital gains tax. He said converting the deduction into a long-term residency income deduction had merit as a policy direction centered on owner-occupancy, but cautioned that the cascading effects of the reform must be "carefully examined" to ensure they do not negatively ripple through the jeonse and monthly rent market.
The party's demands reflect concerns raised primarily by lawmakers from Greater Seoul constituencies. Park Seong-jun, the Democratic Party's chief spokesperson, said in an MBC Radio interview Monday that "lawmakers representing Seoul constituencies are extremely sensitive when it comes to real estate, particularly taxation," adding that "the party strongly requested that the resident/non-resident distinction be dropped altogether — the government must find that quite uncomfortable."
The party and government reached a consensus on expanding the recognized residency criteria for single-home owners who were unable to live in their homes due to unavoidable circumstances such as overseas stays, job transfers or illness. Whether to eliminate the resident/non-resident distinction entirely, as the Democratic Party has demanded, is expected to require further discussion.
Rep. Kim Hyeon-jeong, whose constituency is in Pyeongtaek, Gyeonggi Province, said on KBS Radio Monday that "the core issue in real estate taxation is the tax treatment of non-resident single-home owners, and party leader Kim has essentially recommended that position to the government." She added that working-level officials had expressed a degree of agreement with the party's proposals, making revisions appear "quite likely."
The Democratic Party also conveyed to the government its view that the cap on the comprehensive real estate tax burden should be raised to 200 percent, and that the fair market value ratio — currently 60 percent and set to rise to 70 percent next year — should be adjusted.
On the supply side, the party also agreed to pursue transferring approval authority for redevelopment and reconstruction projects of 500 units or fewer to local district mayors. Chief Spokesperson Park told reporters after Sunday's party-government meeting that the party would "pursue institutional reform to grant district mayors authority over redevelopment and reconstruction projects of 500 units or fewer, reflecting requests from Seoul district mayors," and would advance related legislation in the National Assembly.
The public comment period for the government's tax reform plan runs through Sept. 3. Park said the current period is "a time to hear opinions from the public, experts, and politicians from both the ruling and opposition parties," explaining that the party had gathered public sentiment during that period and conveyed it to the government.
The party and government plan to begin full-scale coordination on revisions this week. The National Assembly is then expected to conduct a formal review of the tax reform plan around December, during the year-end budget bill deliberation process.
Meanwhile, the People Power Party criticized the Democratic Party's revision demands as a "patchwork fix" rather than a fundamental solution. PPP floor leader Jeong Jeom-sik said at a supreme council meeting Monday that "the ruling party's demands are not a fundamental solution either," asking: "What is the point of dropping the resident/non-resident distinction without overhauling the property tax framework? Isn't that just telling everyone — residents and non-residents alike — to take the comprehensive real estate tax hit together?"
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