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Homeowners in South Korea who own multiple residential properties in one of Seoul’s most pricey districts are reportedly rushing to give away their extra homes to relatives or family members. This move was triggered by the fact that the country will be imposing new tax rules in June.
Why the Koreans are handing out their properties
The said tax will be tougher, and before it could take effect in two months, a number of multiple homeowners have already started disposing some of their apartments by giving them away as gifts.
As per The Korea Herald, in March, data shows that apartment transfers in Gangnam already reached 812, and this was just for a month. This was said to be the highest record and roughly 6.3 times higher compared to the previous months that only recorded 129 instances.
The transfer record of apartments to relatives in March was said to be very close to the all-time high record of 832 that happened in June of 2018. The city started recording the transfers in January 2013.
“It seems that owners of multiple homes in Gangnam have decided to hand their apartments down to their family instead of selling them to others to avoid a hefty, comprehensive real estate tax,” senior real estate researcher at Kookmin Bank, Park Won Gab, said in a statement. “And an increased sales tax for multiple-home owners, which will start to be in place from June.”
What will happen after the implementation of a new tax in June?
Based on the report, starting in June, people who own two or more homes will have to shoulder heavier real tax rates as the government is raising them to 6 percent, which is so much higher than the normal maximum rate of 3.2 percent. For the current property tax that already has rates ranging from 6 to 45%, they will be slapped with even higher percentage levels ranging from 65% to 75%.
While Gangnam had the highest property transfers last month, it was reported that across Seoul, the total number is already 2,019. Meanwhile, Yonhap Agency News previously reported that S. Korea will be imposing higher taxes on homeowners with multiple homes to curb housing prices.
