President Lee: "No Market Can Defeat the Government"... Dismisses Hopes for Another Extension of Heavy Capital Gains Tax Exemption (Comprehensive)

"Escaping the Republic of Unearned Real Estate Gains: If It's Necessary and Useful, We Should Not Avoid It"
"Grace Period for Contracts Signed by May 9 to Be Discussed in Cabinet Meeting"
"Holding Out? Policymakers Are Not Foolish Enough to Ignore an Obvious Loophole"
President Lee Reaffirms His Determination Three Times on Social Media in a Single Day

President Lee Jaemyung has reaffirmed his plan to end the temporary exemption from the heavy capital gains tax rate for owners of multiple homes on May 9. President Lee drew a clear line against market expectations for another extension, stating that anyone who thought the law would be revised again to allow for another extension was mistaken. However, he added that the government would discuss in a Cabinet meeting whether to grant a grace period for contracts signed 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 and Normal Society. There Is No Government That Can Defeat the Market, but There Is Also No Market That Can Defeat the Government," reiterating his stance. He emphasized, "The decision to end the exemption from the heavy capital gains tax for owners of multiple homes was already made in February 2025," and added, "Unfair benefits resulting from abnormal circumstances must be eliminated, even if it is difficult."

The heavy capital gains tax for owners of multiple homes was introduced in 2021 under the Moon Jae-in administration. When the Yoon Suk-yeol administration took office in 2022, it temporarily suspended the tax for four years to stimulate housing transactions, but the exemption will end on May 9.

President Lee also stated his intention to revise the system that allows owners of multiple homes to profit by "holding out." He said, "Abnormal holding out should not be profitable. The benefit of holding out should not exceed the cost of doing so, right?" Referring to a previous amendment to the Commercial Act, he remarked, "There was a lot of resistance before the amendment, but after it was implemented, both companies and society as a whole benefited."

Once the exemption ends, it is expected that in regulated areas such as designated adjustment zones, owners of two homes will face a 20-percentage-point surcharge on the basic tax rate (6-45%), and owners of three homes will face a 30-percentage-point surcharge. There are also concerns that the effective tax rate could rise significantly for high capital gains. The market anticipates that there may be a surge in "last-minute" sales before the deadline, but after implementation, there are fears that transactions will shrink further as owners of multiple homes delay selling, leading to a so-called "lock-in" effect.

However, President Lee acknowledged, "The government is also at fault for making people believe in repeated extensions over the past four years," and added that he would discuss in a Cabinet meeting whether to grant a grace period for contracts signed by May 9.

Subsequently, President Lee continued to share his views on abolishing the heavy capital gains tax on social media. Sharing an article titled "Grace Period for Heavy Capital Gains Tax Extended to Contracts Signed by May 9," he wrote, "Holding out? It is an obvious loophole, but policymakers are not foolish enough to allow holding out to remain profitable while knowing about it."

Again, President Lee shared an article titled "President Lee: 'No Market Can Defeat the Government'-Meanwhile, Multiple Homeowners in Gangnam Turn to Gifting" and commented, "Whether it's a house or anything else, paying gift tax and making a legitimate transfer is not wrong." He continued, "Isn't the claim that 'you must sell a house to dispose of it, and not gift it' contrary to the principles of a capitalist market economy that respects private property rights?"