Sorry Juche, but I haven't heard of this exemption, and I am a bit skeptical that such an exemption would be created. Certainly just about everyone that has purchased a flat in the 2004 - 2007 period would have used credit and would be in a similar situation as you.
then it means you pretty much lose money no matter what, unless I understand this all wrong.
No not the case at all. To use my previous example if you paid 500k and sell for 600K then you have a tax of 60k, and you net 40k. If you are selling for less than 10% greater than your original purchase then yes, you are losing money, and this may well be the case for most purchases made in 2006.
I agree that it is a bad law and has left many in a tough situation. That is probably why it changed in 2007. I recall that during this period, and still to this day, that many in property game kept refering to it as a Capital Gains Tax of 10%, which it is not. It would be more proper to call it a sales tax of 10%.
On 1.1.2010 properties purchased in 2004 will complete the 5 year period and I suspect that many properties will come on to the market from sellers very anxious to exit. Even more so on 1.1.2011 and 1.1.2012
Good luck with your sale. Get in touch with a good accountant or even call the tax office directly. Hopefully I am wrong in everything I have written...