What If the Buyer Cancels Mid-Contract? ... "Multiple-Home Owners Cannot Be Granted Relief" [Q&A]

Heavy Capital Gains Tax Suspension for Multi-Homeowners Ends on May 9
If a Contract Is Signed, a 4?6 Month Grace Period Is Granted for Final Payment

On May 10, the system of imposing heavier capital gains tax on owners of multiple homes will be reinstated for the first time in four years. Going forward, when a person owning three homes sells a property, they will have to pay up to 82.5% of the capital gains (including local income tax) as tax. On the 12th, the Ministry of Economy and Finance held a joint briefing with related ministries, including the Ministry of Land, Infrastructure and Transport and the Financial Services Commission, and officially announced, "We will terminate the temporary suspension of the surcharge on capital gains tax for owners of multiple homes on May 9, 2026, which is the currently scheduled sunset date."

The measure to impose heavier capital gains tax on multiple homeowners will be reinstated from May 9. Capital gains from the sale of homes owned by multiple homeowners in designated regulated areas will be subject to a top rate of 75% (82.5% including local taxes). On the 12th, a real estate listing notice was posted on the exterior wall of a real estate agency office in Seoul. Yonhap News

However, when a person without a home purchases a property from an owner of multiple homes that comes with an existing tenant, a grace period of 4 to 6 months will be granted before the heavier tax applies. In existing regulated areas such as the three Gangnam districts (Gangnam, Seocho, and Songpa) and Yongsan District, if a sale contract is signed by May 9, a period of 4 months (until September 9) will be granted, which is one month longer than the government initially announced. In the remaining 21 districts newly designated as regulated areas and 12 regions in Gyeonggi Province (Gwacheon, Gwangmyeong, Suwon Yeongtong, Jang’an, and Paldal, Seongnam Bundang, Sujeong, and Jungwon, Anyang Dongan, Yongin Suji, Hanam, and Uiwang), if the final payment and registration are completed by November 9, the surcharge on capital gains tax will not be applied.

Tenants will be guaranteed the right to reside until the end of their remaining lease term. To this end, the actual-residence requirement under the land transaction permit system for buyers will be partially relaxed. If a lease contract was concluded by the policy announcement date, that is, by February 12, 2026, the buyer of the home will have their actual-residence obligation deferred until February 11, 2028 (a two-year residence requirement).

Yonhap News Agency

The following are key parts of the Q&A between reporters and Cho Manhee, Director General for Tax Policy at the Ministry of Economy and Finance, Yoon Deokki, Head of the Macroprudential Policy Team at the Financial Services Commission, and Park Junhyung, Director General for Land Policy at the Ministry of Land, Infrastructure and Transport.

▲ There are criticisms that ending the suspension of the heavier capital gains tax on owners of multiple homes will not substantially increase listings, as more people will transfer properties to their children at low prices.

Park Junhyung = According to district-level statistics in Seoul, listings have increased by 10%, and in the case of Songpa District, by 20%. If there are cases of transfers to children, the relevant authorities will strictly coordinate to investigate whether actual transaction reports have been properly filed and whether gift tax has been properly paid.

▲ If owners of multiple homes do not put their properties on the market and continue to hold them, what measures are there?

Cho Manhee = We are currently conducting a study on the overall real estate tax system. We are at the stage of reviewing how to restructure it in a reasonable way while looking at various situations and gathering public opinion.

▲ What is the exact definition of a person without a home who is eligible to purchase properties owned by multiple-home owners?

Ministry of Economy and Finance = At the time of applying for a land transaction permit, the household must not own any housing. Pre-sale rights and move-in rights are also included. (However, homes priced at 300 million won or less located outside the Seoul metropolitan area, metropolitan cities, and Sejong City are excluded from the calculation of the number of homes owned.)

▲ Only people without homes can buy properties from owners of multiple homes, but if there is a jeonse tenant, it is difficult to obtain a mortgage loan. How many people are there who are wealthy in cash but do not own a home?

Yoon Deokki = Basically, even if someone does not own a home, they must be living somewhere, so they can be viewed as having some equity. Given that there has recently been a large number of semi-jeonse and monthly rental contracts, there are quite a few properties for which mortgage loans are possible.

▲ There are concerns that, since owners of multiple homes have been supplying jeonse and monthly rental properties, if those units instead come onto the sales market, the shortage in jeonse and monthly rentals could worsen. In fact, jeonse and monthly rent prices have fallen.

Park Junhyung = The jeonse and monthly rent issue is being addressed with a variety of measures as part of the government’s comprehensive real estate policy response. This measure is not expected to cause a significant reduction in jeonse and monthly rental supply. This is because when people without homes purchase properties by taking advantage of the (actual-residence obligation deferral) benefit, those units will also come onto the jeonse and monthly rental market. The fundamental nature of this measure is not to directly stabilize the jeonse and monthly rental market or the sales market. Rather, it is focused on providing convenience in light of the termination of the suspension of the heavier tax.

▲ If a contract is signed before May 9 but the buyer does not pay the balance and cancels the contract midway, can the owner of multiple homes be granted any relief?

Cho Manhee = No, they cannot receive relief.

▲ Are business operators whose registered rental status has expired also subject to the heavier capital gains tax on owners of multiple homes?

Cho Manhee = In the case of registered rentals, they were not originally subject to the heavier capital gains tax, so this does not apply to them.