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

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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 suspension of the heavier capital gains tax rate for owners of multiple homes on May 9. President Lee made it clear that those expecting another legislative extension were mistaken, drawing a line against the market’s ‘expectation of further postponement.’ However, he added that the government would discuss in a Cabinet meeting whether to grant a grace period for contracts signed by May 9, exempting them from the higher tax rate.

Yonhap News Agency

On January 25, President Lee posted on the social networking service X (formerly Twitter) under the title, “South Korea is returning to a predictable, normal society. There is no government that can defeat the market, but there is also no market that can defeat the government.” He wrote, “The end of the grace period for the heavier capital gains tax on multiple-home owners was already set for February 2025,” and emphasized, “Unfair benefits resulting from abnormality must be eliminated, even if it is difficult.”

The heavier capital gains tax for multiple-home owners 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 revitalize the housing market, but this suspension will end on May 9.

President Lee also pledged to address the system that makes ‘holding on’ profitable for multiple-home owners. He stated, “Abnormal holding strategies should not be profitable. The benefits of holding should not outweigh the costs of holding, right?” Referring to a case of commercial law revision, 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 grace period ends, it is expected that in regulated areas such as designated adjustment zones, owners of two homes will face an additional 20 percentage points on top of the basic tax rate (6-45%), while owners of three homes will face an additional 30 percentage points. Some observers note that the effective tax rate could rise significantly for high-value capital gains. The market anticipates a rush of last-minute listings before the deadline, but there are also concerns that, after implementation, multiple-home owners may delay selling, leading to a further contraction in transactions-a phenomenon known as ‘listing freeze.’

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 consider, in a Cabinet meeting, allowing contracts signed by May 9 to be exempt from the heavier tax rate.

Subsequently, President Lee continued to share his views on the repeal of the heavier capital gains tax on social media. Sharing an article titled “Grace period for heavier tax extended for contracts signed by May 9,” he wrote, “Holding on? It’s an obvious loophole, but policymakers are not so foolish as to allow holding to remain profitable when they are aware of it.”

Again, President Lee shared an article titled, “President Lee: ‘No market can defeat the government’-Mocked as Gangnam multi-home owners rush to make gifts,” and commented, “Whether it’s a house or anything else, there’s nothing wrong with paying the proper gift tax and making a legitimate transfer. Isn’t the claim that ‘you must sell a house rather than gift it’ contrary to the principles of a capitalist market economy that respects private property rights?”