Sixty Percent Transfer Tax Rates on Those Owning More than Three Houses

The government will impose high capital gains tax rates of 60 percent on those who own three or more houses in Seoul and its adjoining areas when they sell their property. It also said that houses valued at more than 300 million won will fall under the latest rules regardless of their locations. There are about 60 to 70 thousand households nationwide which will be affected by the change.

The government also said inheritance and gift taxes will be levied on increased wealth from land development or the initial public offering (IPO) as the specific tax base of the government’s all-inclusive inheritance tax regime was being worked out.

The Ministry of Finance and Economy said on Monday that “revision to the tax code for a comprehensive plan October 29 (to deal with real estate speculation)” and “revision to inheritance and gift taxes” will take effect starting next year.

Once people own more than three houses in Seoul and its adjoining areas, including Incheon and Kyungki, along with those in Busan, Daegu, Daejeon, Gwangju and Ulsan, they will be affected by the new rules. Houses valued at more than 300 million won will fall under the new rules regardless of their locations as well. However, those who live in counties, burgs, or country towns in the metropolitan area will be exempted from the stiff taxes.

People with at least three houses will be given a one year grace period through December 31, 2004, and so the heavy taxes will be imposed starting January 1, 2005. The government also announced a new measure imposing capital gains tax rates as high as 15 percent on those who own more than two houses and at least one in the special control zones starting next year.

Kwang-Hyun Kim Ki-Jeong Ko kkh@donga.com koh@donga.com