Experts say, “Jeonse is unstable due to non-residency penalty”… Reduction of special long-term deductions is also considered

There is also a need for a production tax credit tax refund... National Assembly scheduled debate

(Sejong = Yonhap News) Reporter Ahn Chae-won = Experts continued to criticize the government's real estate tax reform plan, which differentially applies tax benefits depending on the residence of a single homeowner.

It has been pointed out that strengthening the tax burden on non-residential single-home owners may increase anxiety in the jeonse market and excessively increase the tax burden on long-term homeowners.

Professor Choi Han-soo of Kyungpook National University expressed concern about the plan to differentially apply tax credit benefits depending on residency at the '2026 Tax Law Amendment Debate' hosted by the National Assembly Budget Office on the 9th.

Professor Choi pointed out, “The ‘non-resident single homeowner penalty’ is a system that challenges the long-standing norm that one home per household is protected regardless of residence,” and added, “The transfer tax burden varies by about 500 million won depending on residence status. If so, beyond inducing actual residence, there is an incentive to collect the jeonse and move in directly.”

He then pointed out, “It is necessary to consider the effects of introducing this system at a time when the jeonse market is most vulnerable.”

He estimated that non-residential single-home owners account for about 20% of all single-home owners in Seoul, and raised questions about the sustainability of the policy in that the system could also affect the voting sentiment of Seoul voters.

Kim In-man, director of the Real Estate Economic Research Institute, said that it is estimated that there are about 830,000 non-residential homeowners in Seoul. “If we impose regulations on them, a vicious cycle may occur that will make tenants’ housing unstable,” he said.

Director Kim also expressed critical opinions on the reform of the long-term holding special deduction (long-term holding special deduction).

The government plan is to gradually reduce the deduction based on the holding period and shift it to focus on the period of residence, setting a deduction limit from 2028 and eliminating the deduction based on the holding period of a single homeowner from 2029.

Director Kim said, “If you own a house your whole life and then inherit it, you pay inheritance tax, and if you donate it, you pay gift tax,” and criticized reducing the deduction limit based on residence as “national tyranny.”

Meanwhile, at the debate on this day, with regard to the introduction of the domestic production tax credit, opinions were expressed that it is necessary to allow refunds within a certain limit for projects with low economic feasibility in the short term. It was also pointed out that the scope of industries eligible for support was too narrow.

The ruling party's opinion was that the family business inheritance deduction reform plan, which strengthened deduction targets and follow-up management requirements, should be applied more strictly, while the opposition party's opinion was that it was encouraging corporate confusion.