Reasons for Proposal and Major Provisions

The current Act applies a tax rate that varies according to the number of houses owned by a taxpayer as of June 1, the date of taxation, based on the sum of the publicly notified prices of the houses.

Unlike the capital gains tax, however, there are no provisions on exclusion from heavy taxation for the comprehensive real estate holding tax when a person temporarily owns two houses due to acquiring a new house before transferring his or her previous house to another party, or when a person owns two homes due to inheritance or marriage. Such persons are subject to the same tax base and rates as speculative owners of multiple houses and as a result, persons who have acquired a house as their primary residence are having to pay excessive comprehensive real estate holding taxes. 

Accordingly, the Amendment prescribes that where a single house owner acquires a substitute house before transferring his or her single house, or temporarily owns two houses due to inheritance or marriage, the former house shall not be included in the scope of houses subject to aggregation of tax bases for the comprehensive real estate holding tax. It also stipulates additional collection of the reduced comprehensive real estate holding tax and additional amount equivalent to the interest thereon if the former house is not sold within two years (Article 8 (2) 3 and Article 17 (6) newly inserted).