South Korea has got rid of the capital gains tax on the sale of homes worth up to 1.2 billion won, or around a million U.S. dollars for those who own just one home.
The Ministry of Economy and Finance said the policy would take effect from Wednesday.
Before the change, capital gains taxes had kicked in when homes were sold for more than about 760-thousand dollars or 900 million won.
The new measure has raised the threshold for tax payments to a little over 1 million dollars based on the market price.
But the tax exemption only applies to families that are single residence owners and have lived in the home for at least two years.
With the rise in the threshold, those who sell their house for more than 1 million dollars will also see their capital gains tax fall.
For example, if a home increased in value from 860-thousand dollars to 1.6 million dollars over the past five years, the seller would have had to pay more than 100-thousand dollars of tax before the revision, but now would pay around 70-thousand dollars.
Last week, the National Assembly approved the tax revision, which was originally supposed to take effect starting next year.
But the change is being implemented around 20 days sooner than originally planned to provide the tax benefits as quickly as possible.
Also the move was aimed to reduce confusion and increase liquidity in the market as many single-house owners were seeking to delay their home sales waiting for this measure to take effect.
An expert says this measure could increase the number of transactions of low and mid-priced houses in the market as it could help fulfill the demands of those who want to move to more preferable locations.
"People who own a single house will try to own 'one good house'. Because the capital gains tax is reduced, more people will try to move to regions that they prefer more, including those with better schools or that are close to jobs. Some who own a house outside the capital might try to move to Seoul."
But he added that in order to effectively increase the volume of houses on sale in the market, capital gains tax for multiple home owners should be reduced as well.
Eum Ji-young, Arirang News.