[Why&Next] Targeting Both Multiple and High-Priced Homes... Aiming to Curb 'Expectations' Over Prices

Excessive Resource Allocation to Real Estate Raises Concerns Over Growth Potential
Capital Gains Tax Surcharge for Multiple Homeowners Likely to Return; Long-Term Holding Deduction for Single-Home Owners Under Review
Maximum Tax Rate for Three-H

President Lee Jae-myung has been consistently labeling real estate as an "unproductive asset" and delivering strong messages, driven by concerns that excessive allocation of resources to real estate could undermine the nation's growth potential. He argues that what is needed now is not a short-term real estate measure, but a mid- to long-term structural transformation that can shift resources into productive sectors.

According to relevant ministries on January 28, the Ministry of Economy and Finance is currently reviewing the overall real estate tax system through commissioned research. Notably, this research is being led by the Property Tax Division, rather than the Real Estate Market Division. While the Real Estate Market Division mainly focuses on short-term market stabilization, such as housing supply and demand, price trends, and transaction slowdowns, the Property Tax Division is primarily responsible for designing the overall mid- to long-term tax structure, including the comprehensive real estate tax, property tax, capital gains tax, the interrelationships between tax categories, and tax equity.

The fact that this division is leading the research suggests that the government is not simply considering adjustments to specific tax rates or temporary suspensions, but is fundamentally redesigning the "framework" of the tax system, including the respective roles of holding and transaction taxes, tax bases, and deduction structures. This aligns precisely with President Lee's stated intention to "correct the abnormally concentrated allocation of resources to real estate." In other words, the current discussion on real estate taxation is viewed as a long-term structural overhaul aimed at changing the very system of wealth accumulation through real estate, rather than a short-term remedy to calm the market.

President Lee Jae-myung's New Year's Press Conference Remarks

(Seoul=Yonhap News) Reporter Kim Dohoon = President Lee Jae-myung is speaking at the New Year's press conference held at the Blue House State Guest House on January 21, 2026. superdoo82@yna.co.kr (End)

Capital Gains Tax Hike for Multiple Homeowners Likely to Return... "End of Abnormal Easing"

Based on President Lee's statements and recent policy trends, the real estate tax reforms the government is most likely to implement can be summarized in three main areas: taxes on selling and holding properties are both under review. The most evident change concerns the capital gains tax for multiple homeowners. Capital gains tax is levied on the profit earned from selling real estate or stocks. It is different from transaction taxes in that it is only imposed when a profit is made.

The government has stated its intention to end the temporary suspension of the "capital gains tax surcharge for multiple homeowners" as scheduled on May 9. Since President Lee has effectively dismissed the possibility of further extensions by calling it a "policy whose end has already been announced," the likelihood of implementation is high. The current basic capital gains tax rate ranges from 6% to 45% depending on the taxable base. However, starting May 10, if the surcharge is reinstated, owners of two homes in regulated areas will face an additional 20 percentage points on top of the basic rate, and those with three or more homes will face an additional 30 percentage points. Including the local income tax (10%), the maximum effective tax rate for owners of three homes will reach 82.5%. The government has defined this as the "end of abnormal easing."

Once the suspension of the capital gains tax surcharge for multiple homeowners ends, the special long-term holding deduction (Jangteukgong) for these owners will also be abolished. Currently, even multiple homeowners can receive a capital gains tax reduction of 2 percentage points per year of ownership, up to a maximum of 30%, but once the surcharge suspension ends, this benefit will be fully eliminated. The actual increase in tax burden is expected to be significant. For example, if a three-homeowner sells an apartment held for more than 10 years and realizes a capital gain of 1 billion won, the current capital gains tax would be about 330 million won. However, with the surcharge and the removal of the long-term holding deduction applied simultaneously, the tax would more than double to the mid-700 million won range.

Since the government announced the 'Housing Market Stabilization Measures' for Seoul and some areas in Gyeonggi Province, concerns have arisen that the availability of jeonse (long-term lease) housing may disappear. On October 16, 2025, a real estate listing board in Mapo, Seoul, showed an X mark on the jeonse information. Photo by Dongju Yoon

Possible Tax Adjustments for Single-Home Households

The special long-term holding deduction (Jangteukgong) for single-home households, which has been relatively protected, is also open to possible adjustments. President Lee has stated, "It is unreasonable to reduce taxes for long-term holding if the purpose of owning a home-whether multiple or a single non-residential home-is for investment or speculation rather than for residence." Currently, even if the sale price exceeds 1.2 billion won, a single-homeowner can deduct up to 80% of the capital gain if they have lived in the home for 10 years. While this system has been maintained to protect genuine end-users, it has been criticized for intensifying demand for "prime properties" and encouraging asset concentration in areas like Gangnam and other high-value districts. Market observers widely expect that the government will likely strengthen the actual residence requirement or reduce or eliminate benefits for single-homeowners who do not reside in their property.

The possibility of strengthening holding taxes is also becoming more concrete, with the comprehensive real estate tax being a prime example. This tax is levied annually simply for owning property, regardless of whether it is sold. During the Yoon Suk-yeol administration in 2023, the basic exemption for the comprehensive real estate tax was relaxed to 900 million won, but there is now discussion of lowering it to 600 million won. Of particular note is the fair market value ratio. The comprehensive real estate tax base is calculated by multiplying the publicly announced price by this ratio. If the current ratio of 60% is raised to previous levels, it would increase the holding tax burden without the need for legislative amendments. Since this can be done by simply revising the enforcement decree, it is a policy tool the government may use to achieve rapid effects. Seo Jin-hyung, Professor of Law at Kwangwoon University and former president of the Korean Association of Real Estate Studies, stated, "Taxes have always influenced the growth of the real estate market. In particular, for multiple homeowners, the end of the capital gains tax surcharge suspension will result in tax disadvantages, but it does not necessarily provide a reason to sell. The impact on the actual real estate market may be limited, as owners may choose to gift properties or simply hold on."