President Lee Jaemyung Presides Over Cabinet Meeting on the 3rd
Heavy Capital Gains Tax on Multi-Home Owners Deferred by Region
Balance Payment and Registration Must Be Completed Within 3 or 6 Months of End Date
Upon Report That "Listings Increas
President Lee Jaemyung is speaking at a Cabinet meeting held at the Blue House on the 3rd. Photo by Yonhap News
The government will end the temporary suspension of the heavy capital gains tax on multi-homeowners on May 9, while granting an additional grace period of 3 or 6 months depending on the region. After being briefed on this plan, President Lee Jaemyung ordered strong additional measures, saying, "It must be designed so that (not selling a house and) holding on becomes a loss." He also instructed officials to review removing the delegation clause in the enforcement decree that had served as the basis for tax cuts for multi-homeowners.
At a Cabinet meeting held at the Blue House on this day, President Lee received a report from Deputy Prime Minister and Minister of Economy and Finance Koo Yunchul on the "Plan to End the Temporary Suspension of the Heavy Capital Gains Tax on Multi-homeowners and Supplementary Measures."
According to the plan, existing regulated areas such as the three Gangnam districts and Yongsan will be given a 3-month grace period. If a contract is signed by May 9 and the balance is paid or the registration is completed within 3 months, the seller will be exempt from the heavier tax. Areas newly designated as regulated zones under the October 15 real estate measures will be exempt if the balance payment or registration is completed within 6 months.
Deputy Prime Minister Koo explained the reason for the differentiated periods, saying, "We took into account past real estate transaction practices and the recent process of expanding regulated areas," and added, "We want to propose a plan that reflects the reality of the market while minimizing inconvenience for the public."
Lee: "There is no 'maybe'; once a policy is set, it must stay the course"
Koo Yunchul, Deputy Prime Minister and Minister of Economy and Finance, is speaking at a Cabinet meeting held at the Blue House on the 3rd. Yonhap News
However, with respect to land transaction permit zones, Deputy Prime Minister Koo reported that, given that the deadline for paying the balance is 4 months after approval, "We have heard calls from the market to set the deadline for contracts signed on May 9 at 4 months instead of 3 months, and we will make adjustments accordingly." The government plans to proceed with follow-up procedures such as legal and regulatory revisions after discussions at the Cabinet meeting and gathering public opinion.
The heavy capital gains tax on multi-homeowners is a system that imposes an additional tax on top of the basic rate when selling a home in a regulated area. Owners of two homes pay an additional 20 percentage points, and owners of three homes pay an additional 30 percentage points. It was introduced under the Moon Jae-in administration in 2021, but the Yoon Sukyeol administration granted a one-year suspension in May 2022 and has extended it every year since.
At the meeting, President Lee placed particular emphasis on policy predictability, saying, "There is no expression such as 'maybe' (possible)." He clarified, "It was not a four-year suspension, but three separate one-year suspensions," and stressed, "This time, it really ends here." He added, "Even if there is some unfairness, once a policy is decided, it must stay the course," and pointed out, "Supplementary measures should be taken in other ways; if the structure is such that only those who trusted the policy end up at a disadvantage, it is not fair."
He also mentioned the need for "advance simulations" and a "red team" at the policy design stage. President Lee said, "The desire for real estate is so intense that even a needle hole can cause the dam to collapse," and urged, "The policy implementation process must be meticulous, and there must not be even 0.1% of 'maybe' in it." Regarding the possibility that multi-homeowners might withhold listings and shrink transactions, he stressed, "It must be designed so that holding on becomes a loss," and added, "We must create an objective belief that, in practical terms, following the current rules is more beneficial."
Report says "Listings increased in the three Gangnam districts and Yongsan"... Lee: "They will increase further, right?"
Kim Yoonduk, Minister of Land, Infrastructure and Transport, is speaking at a Cabinet meeting held at the Blue House on the 3rd. Yonhap News
During the Cabinet meeting, President Lee also checked the current status of real estate listings on the spot. When he asked Cabinet members, "Is there any transaction data showing that (real estate) listings are increasing?" Minister of Land, Infrastructure and Transport Kim Yoonduk replied, "Overall listings have decreased in Seoul, but in the three Gangnam districts and Yongsan, listings have increased by an average of 11.74%." When Minister Kim went on to say, "The fact that listings have increased in Yongsan and the three Gangnam districts is a very important point," President Lee responded, "Starting from this Cabinet meeting, they will increase even more, right?"
Field variables such as the requirement for actual residence or the presence of tenants, which can become obstacles when selling real estate in regulated areas, were raised as contentious issues. President Lee instructed, "Review measures for situations where tenants cannot move out within 3 to 6 months." However, President Lee also said that even if some exceptions are allowed, "Keep the standard date (May 9), but conduct a detailed review of exceptional situations that lead to unreasonable outcomes."
Concerns were also raised that the criteria for determining multi-homeowners are delegated to an enforcement decree, leaving significant room for arbitrary application. Minister of the Interior and Safety Yoon Hojoong suggested, "Taxation is governed by the principle of statutory taxation, but because the definition of multi-homeowners is in an enforcement decree, it has been possible to reduce taxes under this structure," and added, "We need to move the criteria into the law itself and revise the delegation clauses." In response, President Lee said, "From now on, we should also consider eliminating the clauses delegated to enforcement decrees."
Meanwhile, before moving on to the policy agenda, President Lee drew a clear line, saying, "Stock prices and housing prices are somewhat different," and "We must not evaluate housing prices and stock prices on the same basis." His argument is that while stock prices support corporate activity and no one suffers damage simply because stock prices rise, when housing prices rise, assets become locked in real estate and cannot flow into productive sectors, thereby distorting the socio-economic structure.
Lee: "Make rewards in the public sector loud and visible, and crack down thoroughly on livelihood-related crimes"
President Lee Jaemyung is performing the national ceremony at a Cabinet meeting held at the Blue House on the 3rd. Yonhap News
Referring to the sharp decline in stock prices, President Lee remarked that "there are people who welcome it," and criticized, "When the social environment improves, the basic principle of a community is to celebrate, encourage, and join forces."
He also ordered an expansion of rewards to boost morale in the public sector. Citing a special commendation case at the Ministry of Science and ICT, President Lee said, "Other ministries should do a lot of this as well. If possible, make it loud and visible." He further urged, "If the public sector is too rigid and only scolding is emphasized, people may lose motivation. Society develops when public officials work proactively and dynamically."
In a briefing from the Supreme Prosecutors' Office, President Lee pointed out that the abuse of monopolistic or oligopolistic positions to set excessively high prices is a factor driving up the cost of living, and called for a "thorough crackdown on livelihood-related crimes."
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