{"id":2206079,"date":"2024-08-07T18:02:14","date_gmt":"2024-08-07T09:02:14","guid":{"rendered":"https:\/\/koreapro.org\/?p=2206079"},"modified":"2024-08-08T18:24:02","modified_gmt":"2024-08-08T09:24:02","slug":"how-south-koreas-tax-overhaul-could-exacerbate-sky-high-real-estate-prices","status":"publish","type":"post","link":"https:\/\/koreapro.org\/2024\/08\/how-south-koreas-tax-overhaul-could-exacerbate-sky-high-real-estate-prices\/","title":{"rendered":"How South Korea\u2019s tax overhaul could exacerbate sky-high real estate prices"},"content":{"rendered":"
South Korea\u2019s finance ministry <\/span>announced<\/span><\/a> significant revisions to the country\u2019s tax laws on July 25, marking the first major overhaul in 24 years, including substantial reforms to the inheritance and gift tax system.<\/span><\/p>\n These adjustments, set to take effect in 2025, aim to modernize the tax framework to reflect current economic realities and reduce the burden on taxpayers.\u00a0<\/span><\/p>\n However, the reduction in inheritance and gift taxes could have far-reaching implications for the economy, potentially fueling real estate investment that will exacerbate housing inequality and trigger market corrections.<\/span><\/p>\n OVERVIEW OF TAX ADJUSTMENTS<\/b><\/p>\n One of the key adjustments in the South Korean government\u2019s <\/span>tax reform<\/span><\/a> is the increase in the per-child deduction limit for inheritance tax from about $36,300 (50 million won) to $363,000 (500 million won). This tenfold increase is intended to ease the financial burden on families with multiple children.<\/span><\/p>\n Additionally, the top inheritance tax rate will be lowered from 50% to 40%, aligning South Korea more closely with other Organization for Economic Co-operation and Development countries, where the average maximum inheritance tax rate is <\/span>26%<\/span><\/a>.<\/span><\/p>\n Another notable change is the abolition of the additional 20% tax surcharge on inheritances from major shareholders. This measure aims to encourage smoother transitions of business ownership and reduce the tax liabilities of inheritors.<\/span><\/p>\n Further, the deduction limit for business inheritance tax for companies that increase dividends will be doubled from about $43.6 million (60 billion won) to $87.2 million (120 billion won). This adjustment is designed to support business continuity and foster corporate growth.<\/span><\/p>\n