Gov't to extend tax breaks for real estate transactions

SEOUL, June 7 (Yonhap) -- The government will extend tax breaks designed to
facilitate real estate transactions to help bolster South Korea's domestic
economy that has been hurt by a worldwide slump.

The Ministry of Strategy and Finance and Ministry of Public Administration and
Security said the 50 percent cut on acquisition and registration taxes for
properties will be maintained for at least one year after the original Dec. 31
deadline.
Starting in Sept. 2006, Seoul lowered acquisition and registration taxes from 4
percent of the sales price to 2 percent to counter a sharp drop in real estate
deals.
The real estate and construction sectors play a significant role in the overall
health of the economy and the job market.
"A revision to related laws will be forwarded to the National Assembly this
month," a public administration official said. He added that policymakers are
currently in agreement that tax cuts should be extended for one year with reviews
to be made to see if such cuts needs to be extended beyond 2011.
He said that the decision to extend the tax benefits is in response to the slow
pace of recovery in the local market, suggesting it may need more assistance.
In the first four months of this year total tax earnings from real estate
transactions fell to 2.9 trillion won from 3.5 trillion tallied for the same
January-April period in 2008.
The central government, however, said that since collecting less acquisition and
registration taxes could hurt the fiscal health of local administrations, counter
measures are needed to boost possible side effects. Both taxes are collected by
regional governments.
The ruling Grand National Party said in relation to the cuts that it may be
prudent to extend them indefinitely, while the main opposition Democratic Party
said cuts in all transaction costs must be balanced out with a higher tax burden
on real estate holdings.
yonngong@yna.co.kr
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