Tax code revision to trim breaks for high-end homes, boost domestic production

South Korea announced tax code revisions on August 3, aiming to reduce tax benefits for high-value home owners while increasing support for domestic production of critical supply chain items. Proposed changes, pending approval from the National Assembly and Cabinet, focus on restructuring the property tax system, emphasizing residential use over investment.

Finance Minister Koo Yun-cheol highlighted the aim to impose heavier taxes on high-end homes, with certain thresholds adjusted. The comprehensive real estate holding tax will transition from a home count-based system to a value-based one, unified across all property owners. Homeowners will face a capped deduction, starting at 2 billion won in 2028, with further reductions planned.

The government plans to raise the tax exemption threshold for single-home owners to 1.4 billion won. Capital gains tax deductions for long-term home ownership will be capped at 1 billion won from 2029. Single-home owners will receive a tax credit based on residency period, with a ceiling of 6 million won from 2028. The revision also introduces tax incentives for sectors like solar energy, wind power, and AI, along with reorganizing location-based start-up incentives.