REITs Association: Make CR REIT tax incentives permanent to tackle unsold homes in provincial areas

[Financial News] The Korea REITs Association has urged the government to make tax incentives permanent for corporate restructuring real estate investment trusts (CR REITs) that buy completed but unsold homes in provincial areas. Its proposal also includes additional support measures, such as waiving acquisition tax in depopulation areas.
On the 15th, the Korea REITs Association said it had submitted recommendations for institutional improvements to the Ministry of the Interior and Safety, the Ministry of Finance and Economy, and the Ministry of Land, Infrastructure and Transport. The key proposals are to extend or make permanent the periods for measures including exclusion from higher acquisition tax rates, exclusion from aggregation for comprehensive real estate holding tax, and exclusion from additional corporate tax on capital gains.
The association said the unsold-home CR REIT system was reintroduced in 2024, but purchases of completed unsold apartments outside the capital region accounted for only about 15% of the total.
The association sees the temporary nature of the tax incentives, under which the acquisition deadline is extended one year at a time, as an obstacle to revitalizing the system. Since establishing a CR REIT typically takes 6–18 months, it said, starting new projects becomes difficult as the incentives’ expiration date approaches.
For local taxes, the proposal calls for making permanent the exclusion from higher acquisition tax rates for completed unsold apartments outside the capital region and stipulating the legal basis directly in the Local Tax Act. It also proposes expanding the scope from apartments to include row houses, multi-unit homes, and other types of housing.
The association proposed stronger support measures for depopulation areas. If a CR REIT acquires a completed unsold home in one of these areas, acquisition tax would be waived and the property would also be excluded from the minimum tax payment system. However, if the home is sold before it has been rented out for five years, the exempted tax would be recouped.
The proposal also includes making permanent the exclusion from higher registration and license tax rates in large cities for the incorporation registration of entrusted-management REITs and CR REITs. It would reduce by 50% the registration and license tax on mortgages registered to finance purchases of unsold homes, and waive it in depopulation areas.
For national taxes, the association proposed extending the period of exclusion from aggregation for comprehensive real estate holding tax on completed unsold homes outside the capital region until the CR REIT’s liquidation is complete. It cited the 5–7 years it takes for a CR REIT to buy homes, operate them as rentals, then convert them for sale or sell them and complete liquidation, while the current incentive is limited to five years.
The proposal also calls for applying a lower comprehensive real estate holding tax rate to homes outside the capital region held by CR REITs that do not qualify for exclusion from aggregation, and abolishing the five-year limit on exclusion from additional corporate tax on capital gains. It also says the sunset provisions for both tax exclusions should be replaced with permanent measures.
Chairman Jeong Byeong-yun said, “With many completed unsold apartments concentrated outside the capital region, unsold homes in provincial areas are a structural problem. The tax incentives for CR REITs need to be made permanent rather than kept as temporary measures, so that efforts to resolve the problem can continue.”
[email protected] Choi Ga-young Reporter