President Lee: "No Market Can Beat the Government... Expecting Another Extension of the Capital Gains Tax Surcharge Suspension Is a Mistake"

"Escaping the Republic of Unearned Real Estate Gains: Necessary and Beneficial Measures Should Not Be Avoided"
"Exemption for Contracts Signed by May 9 to Be Discussed in Cabinet Meeting"

President Lee Jaemyung has reaffirmed his intention to end the temporary suspension of the capital gains tax surcharge for owners of multiple homes on May 9. President Lee drew a clear line against market expectations for another extension, stating that it would be a mistake to assume the law would be amended again for another extension. However, he added that the government would discuss in a Cabinet meeting whether to grant a grace period for transactions contracted by May 9.

Yonhap News Agency

On January 25, President Lee posted on the social media platform X, under the title "Korea Is Returning to a Predictable, Normal Society. There Is No Government That Can Beat the Market, but There Is Also No Market That Can Beat the Government," reiterating his stance. He emphasized, "The end of the grace period for the capital gains tax surcharge on multiple home owners was already decided for February 2025," and added, "Unfair benefits resulting from abnormal situations must be eliminated, even if it is difficult."

He also stated his intention to address the structure that makes it profitable for multiple home owners to hold onto their properties. President Lee wrote, "Abnormal holding strategies should not be profitable. The benefit of holding should not outweigh the cost, should it?" Citing a case of commercial law revision, he remarked, "There was much fuss and resistance before the revision, but once it was implemented, both companies and society as a whole benefited."

Once the current grace period ends, owners of two homes in regulated areas such as designated adjustment zones are expected to face an additional 20 percentage points on top of the basic tax rate (6-45%), while owners of three homes will face an extra 30 percentage points. There are also projections that the effective tax rate could rise significantly for high-value capital gains. The market anticipates a surge in last-minute listings before the deadline, but there are concerns that after implementation, multiple home owners may delay selling, leading to a further contraction in transactions-a phenomenon known as "inventory lock."

However, President Lee also acknowledged, "The government is partly to blame for having led people to believe in repeated extensions over the past four years," and added that the Cabinet would discuss granting a grace period for contracts signed by May 9.