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[경제][이슈인사이드] Transfer tax will be eased from tomorrow at the earliest… What is the real estate market outlook?

■ Host: Kang Jin-won anchor, Park Sang-yeon anchor
■ Appearance: Kwon Dae-jung / Professor, Department of Real Estate, Myongji University

* The text below may differ from the actual broadcast, so please check the broadcast for more accurate content.

[앵커]

The transfer tax exemption standard for one household per household will be raised from 900 million won to 1.2 billion won.

[앵커]

It will take effect tomorrow as soon as possible, and the market is also reading a chaotic atmosphere ahead of the effective date.

Let’s discuss real estate market issues with Kwon Dae-jung, a professor of real estate at Myongji University. welcome.

[앵커]

Hello.

First of all, isn’t the standard for non-taxation of capital gains tax for a single home owner increased from 900 million won to 1.2 billion won based on the market price, that is, the actual purchase price? The related thing is that in the case of tax anyway, it has to be adjusted by the tax law, so is this a situation that has already passed the plenary session of the National Assembly?

[권대중]

The enforcement will probably be on January 1 of next year, but it seems to be implemented immediately after announcing this. The reason is that the amount of real estate has risen so much during that time. Since May 2017, when the Moon Jae-in government took office, the market price of a house worth 600 million won at that time was about 1.23 billion won as of the end of last month. It doubled more. So the tax burden has increased. In addition, the long-term ratio special deduction system has been changed for the non-taxation requirement for one house per household. It was changed to a two-year residence requirement from the 8.2 measures in 2017. As a result, it seems to be implemented early to alleviate the tax burden even for self-employed people in a difficult state due to the corona crisis of various ordinary people.

[앵커]

First of all, there is something I need to convey to the viewers, but the relaxation of the tax exemption standard from 900 million won to 1.2 billion won based on the market price passed the National Assembly plenary session, and for this to actually take effect, shouldn’t it be passed on to the government and go through the horror work? ? The cabinet meeting is scheduled to be held today, and according to the forecast, it is expected that it will be implemented from the 8th, that is, tomorrow.

[앵커]

Please explain in detail what specific benefits there will be if this tax exemption standard is raised.

[권대중]

First of all, if a single householder who pays transfer tax resides for more than two years, in the past, he had to pay transfer tax on the profit between 900 million won from the purchase price. If this increases to 1.2 billion, you will have a profit of about 300 million. The transfer tax is expected to be between 6 and 45%. In the case of one house per household. Of course, multi-family dwellings are subject to heavy taxation, but that amount is not taxable, so it should be regarded as not paying tax. Then, ordinary people usually do not pay up to 900 million won, but it increases to 1.2 billion won, so there is a high possibility that the demand for transfers will increase. For ordinary people, 900 million won’t be low-income people, but for those who own houses under 1.2 billion won, it’s quite good news.

[앵커]

The professor gave me a brief mention earlier, but as expected, after the law was passed in the National Assembly, there was an expectation that it would be implemented from January next year. don’t you? What were the confusions?

[권대중]

First of all, in the case of a sale contract, if the balance of the balance in the middle payment process is completed before January 1 of next year, there is a possibility of delaying it until January 1 of next year. That’s confusing. It is applied at the time of immediate transfer or due date of the balance, whichever is earlier. So, there are cases where you can’t move again because of procrastination, and it seems to be implemented early because of this confusion. In hindsight, it’s not certain.

[앵커]

So, to put it simply, from the perspective of the person selling the house, that is, the seller, the transfer tax exemption standard was relaxed to 1.2 billion won, but if the house was sold for 1.15 billion won. However, before the enforcement of the law, if it was based on 900 million won, you would have to pay capital gains tax. So, the seller will tell the person who wants to buy the house to pay the balance later after the law goes into effect, and from the buyer’s point of view, if there is an existing house, they will receive the money and move out and move into a new house. Are you saying that there is confusion because there are different interests in the market because there are other parts that are not available?

[권대중]

Yes, there can be quarrels. So, from the point of view of the home owner, it is correct to pay the balance or hand over the registration after the enforcement of this law. That’s how you get tax benefits. But not for the people who live there. It’s on the date of the contract. The person who lives there has absolutely nothing to do with it. As a result, confusion arises from the point of view of the transferor and of the seller.

[앵커]

If this is more than 1.2 billion won now, we’ll see the graphics in detail to explain how much transfer tax can be saved. Please bring up the graphic. Let’s take the case of a single householder, who purchases a house for 1.2 billion won and wants to transfer it for 2 billion won. What happens if you hold the property for 3 years and reside there for 2 years?

[권대중]

In this case, there is a special deduction for long-term holding of 20%. So in this case, before the current law is amended, the capital gains tax is 125.84 million won. It’s huge. However, if this law is amended, it will be reduced to 84.62 million won, resulting in a profit of about 41.2 million won.

[앵커]

Wait. What you are seeing now is if you have owned the residence for more than 10 years. Could you open another graphic? Now this graphic. Please continue with the explanation.

[권대중]

In such a case, if the capital gains tax itself is held for more than 10 years, the special deduction for long-term holding is up to 80%. So, the tax has been reduced a lot, so the current amount is about 16.83 million won, but when the revised law is applied, it comes out only 10.49 million won. So, as I said earlier, because the transfer period, ownership period or holding period is short, it comes out over 100 million won, and there is a special deduction for long-term holding. As a result, even if the law does not change, not much will come out. So, if you change it, as I said before, you will make about 6.34 million won in profit.

[앵커]

Now, news has come that the revised Income Tax Act, which will ease the transfer tax exemption from the existing 900 million won to 1.2 billion won, has passed the State Council and has been decided to take effect from tomorrow, that is, from the 8th. So, if we look at this content now, shouldn’t we have to pay the balance tomorrow, or move the date of payment of the balance or the registration? This is the earliest of these dates, but generally market practice is to register after paying the balance, so if you pay the balance tomorrow, you can get this tax relief.

[권대중]

Yes. Since the day the balance is paid is the effective date of the law, it is based on 12:00 p.m. Therefore, for those who cannot pay the balance now, if the period is not a problem because of one day, it is safest to pay the next day if it is implemented from tomorrow.

[앵커]

First of all, there may be several such variables.

[권대중]

The protection of the rental protection law is also similar, even if the contract was signed today, it is not right now. It goes into effect from 12pm tonight. Therefore, if you are anxious while paying the balance, it may be safer to pay the day after tomorrow if you say it will be implemented from tomorrow.

[앵커]

So, if you look at the so-called civil law or something like that, there are various interpretations such as super-uniform dispersion and inclusion. These interpretations can be a bit vague, so you are saying that it is safest to do it around the 9th the next day with a little extra time.

[앵커]

Looking at it now, I wondered if the standard for imposition of the transfer tax for multi-homeowners would be reviewed, but the Blue House drew the line. How do you see that possibility?

[권대중]

He said that the Ministry of Strategy and Finance had never heard of it either. Deputy Prime Minister Hong Nam-ki also drew a line on multi-housing as a heavy transfer tax. Perhaps this is because it is an election. I don’t think the government has any kind of discussion with the party or anything like this. Therefore, the tax-free requirement for one house per household is to provide benefits mainly to end users. However, it is unlikely that multi-family housing will be eased even temporarily, as the government sees it as speculative demand. The temporary one was given for six months from December 2018, but now, from the perspective of multi-family dwellers, the period was too short to sell.

If the ruling party candidate Lee Jae-myung is elected, it will probably not be easy to ease the transfer tax. If Candidate Seok-Yeol Yoon becomes a candidate, there is a possibility that it will be implemented. Because it is in the promise. So it doesn’t seem like right now.

[앵커]

Now, viewers, I think there are a lot of people who might be interested, so I will ask you an additional question with a detailed example. I rented out the house I was living in now, got a new house of a large acreage, and moved in. I bought a house.

In that case, wouldn’t it be a temporary one-family-two-household? Are these types of people eligible for transfer tax relief?

[권대중]

You can get it. As the contract is not signed now, it is as of the transfer date. And it must be sold within a year. If you sell your old home within one year, you can receive transfer tax relief tax benefits, including a special deduction for long-term ownership. It is not retroactive to just what you did before.

[앵커]

Also, in order to receive the temporary one-family, two-family benefits per household, there are also various holding requirements and residence requirements, so you should look at them carefully.

[권대중]

Yes. This time, when the transfer tax for one house per household is 900 million won to 1.2 billion won, the people who benefit the most are the transfer demand. Those who sell 900 million homes and move to 1.2 billion homes benefit.

[앵커]

And, looking at the relief of transfer tax exemption, there is a special deduction for long-term holding and there are various existing deduction benefits. It seemed like a lot to see. How is it?

[권대중]

It is the biggest benefit if the number of people who bought it cheap when acquiring it and made it expensive when transferring it is less than 1.2 billion won. For example, if you buy a house for 300 million won and sell it for 1.2 billion won, one house per household gets a deduction of 80% or more after 10 years or more, but regardless of that, it is not taxable.

So, even if 300 million becomes 1.2 billion, you don’t pay taxes, but you see this benefit the most.

[앵커]

So, if you acquire it cheaply and sell it for less than 1.2 billion won, you will benefit the most.

So, the benefits are relatively small, should I look at it like this?

[권대중]

Yes. Progressive taxation is applied on items exceeding 1.2 billion won.

[앵커]

Let’s take a look at the recent real estate market atmosphere. The wait-and-see situation continues, should we look at it like this?

[권대중]

Yes. The rate of increase has slowed as the transaction volume in the real estate market, especially apartment sales, has decreased. Overall, it is not a decline, but the rise has slowed, but if you look at the data of the Korea Real Estate Agency every week, it drops by 0.01%.

This is probably the biggest influence on loan regulation. There was even an interest rate hike. Another is that November and December are the off-season.

There seems to be a burden of the surge as the government continues to regulate loans now. I think this will be known only in January or February of next year. It’s starting to calm down a bit right now.

[앵커]

As an extension of the question, isn’t this a situation where the benefits of easing the transfer tax non-taxation standard are excluding the multi-residential ones? So, the number of items on the market will not increase that much, and there seems to be such an expectation.

[권대중]

Yes. Since it is tax-free for one homeowner per household, I don’t think there will be any for sale except for previous demand. Just because the tax-free requirement has risen from 900 million won to 1.2 billion won, it seems like they won’t sell their house and move out at that time.

And since this is not a short-term temporary, the law has been changed, so even if you sell it next year, you will get a benefit. If so, it doesn’t seem to have anything to do with the increase in sales.

[앵커]

So, even if people who own one house put up a house, then it is in the position of the supplier, but they have to go to another house to buy it, but because it is the position of the consumer, the impact on the market is not great.

[앵커]

First of all, it seems that we will have to watch the situation until early next year, but it is an extension of what you said before, and even though there is a trade cliff, new prices are still coming out in Gangnam. How should I look at this?

[권대중]

The reason is that if it exceeds 1.5 billion won, the loan itself is not available. So, because it has nothing to do with loan regulations, they have a lot of cash flow and they keep flocking to expensive apartments and smart apartments.

Multi-family homeowners are subject to heavy taxation from the property tax, so even if a single householder purchases a house worth 2 billion or 3 billion won, which is more than 1.5 billion won, the property tax is not much, but cash rich people buy without getting a loan.
I think the government’s loan regulation is putting pressure on the middle class in the end. So, in the case of high-priced apartments and high-priced houses, there is no significant impact.

[앵커]

Earlier, the professor also said that we should watch the market a little more because there is a big variable such as next year’s presidential election.

But now, with the introduction of the cheonsei rent cap system and the right to apply for contract renewal, from next summer, in a way, people who have used the right to apply for contract renewal once come back to the market and come out to the cheonsei market and renew the contract, isn’t it?

From that point on, the price of cheonsei may skyrocket, so there are concerns that landlords may pass on the increased tax burden to tenants. What do you think of the professor?

[권대중]

First of all, this year’s monthly rent is almost halved next year. According to real estate 114 and real estate acquaintances, next year, Seoul will only have 12,000 to 3,000 households moving in.

However, there is demand, but there is no supply, and the price has to go up. Here, among the three rental laws, there are some people whose extension of the monthly leasehold system and the right to renew the contract ends in August of next year.

There is no limit here, so there is a possibility that the rent will go up quite a bit. There is a possibility that there may be a tax transfer because it also increases the estate tax and property tax.

So, if you sign a monthly rental contract after August of next year, the price will rise a lot and it is highly likely to become an unstable market.

[앵커]

On the other hand, from the perspective of the ruling party and the government, the newly introduced systems related to cheonsei have yet to be settled, so we have to wait until they are settled. Also, I would like to point this out by reference to the fact that they also have a position that the impact of tax transfer of the taxation will not be as large as that of the market to be concerned about.

I think the conversation with the professor should end here. So far, we have talked about real estate with Kwon Dae-jung, a professor of real estate at Myongji University. Thank you for your words today.

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