November 30, 2021 12:59
The ruling and opposition parties have agreed to raise the upper limit for transfer tax exemption for home sales from W900 million to W1.2 billion provided the owners have no second home (US$1=W1,193).
They also agreed to delay taxing gains from cryptocurrency trading until 2023.
As a result of the compromise, the income tax revision bill sailed smoothly through the taxation subcommittee of the National Assembly's Finance Committee on Monday.
The bill will now be reviewed by the Legislation-Judiciary Committee before being put to a vote in a full session of the National Assembly early next month.
The tax exemption cap is being raised because of seething public anger about skyrocketing housing prices that have rendered the old definition of a "high-priced" home obsolete.
The ruling Minjoo Party already decided back in June that a more realistic threshold needs to be set.
But since that amounted to a minor palace revolt against President Moon Jae-in's failed housing policy, loyalists forced a delay claiming the exemption would amount to a tax cut for the rich.
According to estimates by Shinhan Bank, the owner of a home that cost W1 billion five years ago and sells for W2 billion currently has to pay W116.16 million in transfer tax. This would be reduced to W77.93 million once the bill is passed.
The ruling and opposition parties also agreed to delay taxing cryptoassets by one year, apparently to appease young voters caught up in the cryptocurrency craze ahead of the presidential election next March. But they failed to reach agreement on raising the tax exemption cap for cryptoassets from the current W2.5 million.
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