New Phase in Ruling Party Conflict... Lee Jae-myung's Comprehensive Real Estate Tax "Under Review, Capital Gains Tax and Acquisition Tax Not Yet"

New Phase in Real Estate Tax Disputes
Comprehensive Real Estate Tax "Partially Under Review"
Capital Gains Tax "No Effect"
Acquisition Tax "Not Yet Reviewed"

The 'transaction cliff' phenomenon in the housing market is intensifying due to the burden of soaring house prices and the impact of loan regulations by financial authorities. Although the peak moving season in autumn has officially begun after Chuseok, the number of transactions is sharply declining as fewer people are willing to buy homes. The photo shows listings posted at a real estate agency in Seoul on the 19th. Photo by Hyunmin Kim kimhyun81@

[Asia Economy Reporter Koo Chae-eun] The government has expressed willingness to discuss the comprehensive real estate tax (종합부동산세) relief plan proposed by Lee Jae-myung, the Democratic Party of Korea's presidential candidate, stating it is "under review to enhance rationality." By showing an attitude to accept one of the cards Lee proposed?relief on capital gains tax, comprehensive real estate tax, or acquisition tax?the conflict between the ruling party and the government over real estate taxation has entered a new phase. However, the government still maintains opposition to the easing of the capital gains tax surcharge, which remains divisive even within the Democratic Party. Regarding acquisition tax relief, the government said it is "not yet under review."

On the 30th, Koo Yoon-chul, the Director of the Office for Government Policy Coordination, appeared on a radio show and mentioned the easing of the comprehensive real estate tax and the postponement of the capital gains tax surcharge, saying, "We are consulting with the party." Koo said, "In cases where rural housing causes a person to be classified as a two-homeowner, such as inherited houses, houses owned by Jongjung (clan associations), or community villages, the government is also internally reviewing the comprehensive real estate tax relief," adding, "This is to enhance rationality." This indicates agreement with Lee’s earlier proposal that multi-home ownership not intended for speculation should be excluded from the comprehensive real estate tax surcharge.

Lee Jae-myung, the Democratic Party presidential candidate, is attending and speaking at a debate hosted by the Korea Newspaper and Broadcasting Editors Association held at the Press Center in Jung-gu, Seoul on the 30th. Photo by the National Assembly Press Photographers Group

The party is aligning its stance as well. On the 27th, Representative Yoon Hu-deok, head of the Democratic Party’s real estate tax working group, proposed a bill to ease the comprehensive real estate tax for temporary two-homeowners. According to the bill, in cases where a person temporarily becomes a two-homeowner due to a child's schooling or job transfer, inheritance, etc., the newly acquired house would be excluded from the comprehensive real estate tax aggregation for two years. Additionally, houses and attached land owned by traditional temples, Seowon (Confucian academies), and Jongjung, as well as houses in rural areas or hometowns, would also be excluded from aggregation.

However, differences remain between the party and government regarding Lee’s request to postpone the capital gains tax surcharge. Koo pointed out the problem, saying, "In a situation where the real estate market is stabilizing, postponing the capital gains tax surcharge leads those with many houses to say, ‘I will wait until the law passes,’ and buyers to say, ‘Prices will fall anyway.’ As a result, the number of properties on the market is actually decreasing." He added, "The government is concerned that various political schedules might only raise expectations or cause confusion in the market." Regarding acquisition tax relief, he responded, "It is not yet under review." Within the party, opposition to postponing the capital gains tax surcharge remains strong, especially among pro-Moon Jae-in faction lawmakers. A senior Democratic Party lawmaker said in a phone interview, "Besides the issue of policy consistency, this is about cutting taxes on gains that will inevitably occur when selling real estate, but I don’t think it will significantly lead to an increase in listings," expressing skepticism about the policy’s effectiveness.