Ministry of Economy and Finance Opposes Postponement of Heavy Capital Gains Tax on Multiple Homeowners... Undermines Trust in Real Estate Policy

"Side Effects Are Greater When Overdose Is Delayed"

Deputy Prime Minister for Economic Affairs Hong Nam-ki is attending the plenary meeting of the Planning and Finance Committee held at the National Assembly on the 30th, responding to questions from lawmakers. Photo by Yoon Dong-joo doso7@

[Asia Economy Reporter Jang Sehee] The Ministry of Economy and Finance publicly expressed opposition to the ruling party's recent proposal to postpone the capital gains tax surcharge on multi-homeowners.

The Ministry of Economy and Finance released a press statement on the 1st, stating, "The government is concerned that postponing the capital gains tax surcharge on multi-homeowners could cause greater side effects amid the fragile stabilization trend in the real estate market."

The ministry explained, "If multi-homeowners, expecting tax savings during the legislative process to postpone the capital gains tax surcharge, withdraw existing listings, price instability could resurface."

It added, "Providing additional tax benefits to multi-homeowners could cause feelings of deprivation among non-homeowners or single-homeowners, and unnecessary controversies such as trust issues could arise if people sell their homes and resolve multi-homeownership situations according to government policies."

Furthermore, it emphasized, "Even though sufficient grace periods were provided when the capital gains tax surcharge and heavy surcharge systems were introduced in the past, if additional postponement measures are implemented, the credibility of the government's real estate policies could be seriously damaged."

Earlier, the government announced the July 10 measures last year, which included raising the capital gains tax surcharge rate by 10 percentage points for multi-homeowners in regulated areas. At that time, the government set a grace period of nearly one year and increased the surcharge rate by 10 percentage points for multi-homeowners in regulated areas starting June 1 of this year.

Accordingly, two-homeowners are subject to a capital gains tax rate of the basic rate (6?45%) plus 20 percentage points, and those with three or more homes are subject to the basic rate plus 30 percentage points, resulting in a maximum capital gains tax rate of 75%.

Regarding recent housing market trends, it assessed, "Due to the effects of tax and demand management policies, strengthened household debt management, and changes in conditions such as interest rate hikes, the price increase has slowed since September."