Vice Minister Lee Sangkyung of the Land Ministry: "Need to Strengthen Holding Taxes, No Additional Supply Measures" [Real Estate AtoZ]

Vice Minister Lee: "Difficult to Control Demand for High-Priced Homes Without Tax Measures"
Mentions Possibility of Adjusting Fair Market Value Ratio and Long-Term Holding Deduction
"Says Expanding Supply in Seoul Is Practically Difficult Due to Limited Available Land"

The government has begun to hint at a possible increase in property holding taxes. Lee Sang-kyung, First Vice Minister of the Ministry of Land, Infrastructure and Transport, publicly mentioned the need to raise holding taxes in order to curb demand for high-priced housing. He indicated that if the instability in the market is not resolved by the October 15 measures, the government is prepared to consider tax policy as an additional option. At the same time, he made it clear that there are virtually no additional supply measures planned.

Lee Sang-kyung, First Vice Minister of the Ministry of Land, Infrastructure and Transport, is holding a briefing on the designation of "Foreigners' Land Transaction Permission Zones" at the Government Seoul Office in Jongno-gu, Seoul, on August 21, 2025. Photo by Jo Yongjun

On October 16, during his appearance on MBC Radio's "Kim Jongbae's Focus," Vice Minister Lee stated, "In order to control issues such as the 'one smart home' phenomenon and the ownership of high-priced homes, it is not financial regulations or supply measures, but the tax system that needs to function." He added, "If holding taxes are strengthened, households with high-priced homes will inevitably face a greater burden, which will naturally reduce demand."

He noted, "During the Yoon Suk-yeol administration, the fair market value ratios for the comprehensive real estate tax and property tax, as well as the rates for bringing appraisal values in line with market values, were lowered, which significantly reduced the holding tax burden." He evaluated the current situation by saying, "At present, the function of the holding tax has been considerably weakened." He went on to say, "In order to redirect funds that are concentrated in real estate into more productive sectors, some form of tax reform, including the holding tax, is necessary."

Regarding the specific direction of tax reform, he explained, "Rather than directly raising tax rates, there are options such as increasing the fair market value ratio or adjusting capital gains tax policies, such as the long-term holding special deduction." He added, "The Ministry of Economy and Finance, which is in charge, is comprehensively reviewing these options."

He also mentioned the possibility of adjusting transaction taxes. He said, "When stabilizing the housing market, the typical approach is to strengthen holding taxes and lower transaction taxes," and added, "That direction is the general theory behind tax reform, and I believe there is a certain degree of possibility."

On the other hand, he drew a clear line regarding the possibility of expanding supply. Vice Minister Lee said, "Although the market is calling for supply measures, there is not much available land in Seoul, and the effects of supply policies take time." He continued, "We have been following up on the September 7 supply measures, but it is difficult to immediately introduce new supply measures."

Regarding the opposition party's criticism that the latest measures amount to a "real estate martial law declaration," he responded, "The term 'martial law' is an excessive expression." He continued, "Since the market is currently unstable, the government is doing its utmost to stabilize it. Please understand it as a special measure."