[2025 Economic Policy] One-Year Extension of Exemption from Heavy Capital Gains Tax for Multi-Homeowners

Government Announces Economic Policy Directions for This Year
Alleviating Uncertainty and Concerns in Construction Market

50% Reduction in New Development Charges in the Capital Region
10% Price Increase When Purchasing Private Housing

The government will extend the exemption from the capital gains tax surcharge for multi-homeowners for one year until 2026 to promote housing transactions and expand supply. It will also eliminate development charges for new development projects starting this year and consider ways to utilize vacant commercial spaces for various purposes such as residential use. In the process of revitalizing regional economies, the government plans to ease the comprehensive real estate tax burden on low-priced houses in local areas.

On the 2nd, the government held a joint briefing with related ministries at the Government Complex Seoul and announced the '2025 Economic Policy Direction' containing these details. The government expects increased domestic and external uncertainties this year and has decided to focus on the early recovery of the construction and regional economies to alleviate concerns about the livelihood economy. Kim Beom-seok, First Vice Minister of the Ministry of Economy and Finance, stated, "(This year) domestic demand will be constrained by sluggish construction and weakened economic sentiment despite easing high inflation and high interest rates," emphasizing the need for policy preparation.

View of apartment buildings in downtown Seoul from Inwangsan Mountain, Seoul. Photo by Yonhap News.

Extension of Capital Gains Tax Surcharge Exemption for Multi-Homeowners by One Year

The government has decided to extend the exemption from the capital gains tax surcharge for multi-homeowners for one year until May 2026 to promote housing transactions and expand supply this year. According to current tax laws, multi-homeowners must pay an additional 20-30 percentage points on top of the basic tax rate when transferring owned real estate. Under the current administration, the enforcement decree was revised to temporarily suspend the surcharge until May, and this extension adds one more year.

The threshold for excluding private rental housing with 30 or more units from the comprehensive real estate tax aggregation (based on publicly announced prices) will be raised. For construction-type housing, the current threshold of 900 million KRW will be increased to 1.2 billion KRW. Additionally, the additional corporate tax on equity accumulation-type sale housing will be eliminated, and a special youth quota will be introduced in tenant selection. Equity accumulation-type sale housing is a public sale housing where buyers pay only part of the sale price upon moving in and acquire the remaining equity later.

This year, development charges for new development projects will be reduced by 50% in the metropolitan area and 100% in non-metropolitan areas. To ensure timely supply of public housing sites to project operators capable of advancing projects, restrictions on resale of apartment sites will be temporarily eased for one year. The delay penalty rate (late interest rate) applied to project operators such as developers and construction companies who purchased land from Korea Land and Housing Corporation (LH) will also be lowered.

Normalization of projects through the Project Financing (PF) Adjustment Committee will also be promoted. In this process, the government will review support measures for changing the use of vacant commercial buildings to various purposes such as residential and office use. Through research projects, the government will explore ways to utilize existing and newly constructed buildings for mixed uses. To expand the capital of the Housing and Urban Guarantee Corporation (HUG), the government is also discussing plans to increase public guarantees by more than 30 trillion KRW.

Easing Comprehensive Real Estate Tax Burden in Local Areas... Measures to Realize Construction Costs

To boost regional economic vitality, the government will ease tax surcharges on local real estate. The government plans to expand the scope of low-priced houses in local areas eligible for the comprehensive real estate tax special case for single-homeowners. Previously, the criterion was a publicly announced price of 300 million KRW or less; this will be raised to 400 million KRW or less. The exemption criteria for acquisition tax surcharges will also be relaxed only for local houses. Going forward, the exemption will apply to houses with a publicly announced price of 200 million KRW or less, instead of 100 million KRW or less.

The government will also promote the expansion of business succession tax deductions for small and medium-sized enterprises relocating or starting up in opportunity development zones. To improve working conditions in industrial complexes, the scope of auxiliary facilities will be expanded to allow various convenience facilities. Previously, these facilities were only available to employees of resident companies, but going forward, facilities accessible to employees of other companies will be permitted.

This year, 138,000 units of public housing and publicly supported private rental housing will be started. From last year through 2026, 150,000 units of newly built and purchased rental housing will be supplied. Among these, more than 30,000 units will have agreements signed early. Major social overhead capital (SOC) construction projects such as highways and new airports will be ordered and started early, with execution reaching about 70% within the first half of the year. The execution rate for the first quarter is expected to be around 52%.

Kim Jae-hoon, Director of Economic Policy at the Ministry of Economy and Finance, said, "Last year, the overall SOC execution target for the first half was 65%," adding, "This year, although not for all SOC, the target for major highways and railway projects will be raised to 70%."

To alleviate difficulties in the construction industry, a 'Three-Pronged Package to Realize Construction Costs' will be promoted. To reflect the impact of the direct purchase system of construction materials on public construction costs and construction periods, supplementary measures that can coexist with small and medium-sized enterprises will be prepared. The direct purchase system of construction materials means that the public construction client purchases competitive products among small businesses and supplies materials to the contractor.

The government is also considering raising the purchase price by 10% when LH or others buy some private apartment units built on public land as public rental housing. When calculating the sale price, additional costs incurred in housing construction will be reflected in the land and construction cost items.