Prime Minister Han Seong-sook speaks at the second National Public Forum on Real Estate Policy, held Monday at the Korea Chamber of Commerce and Industry in Jung-gu, Seoul. [Yonhap]
Prime Minister Han Seong-sook speaks at the second National Public Forum on Real Estate Policy, held Monday at the Korea Chamber of Commerce and Industry in Jung-gu, Seoul. [Yonhap]

"Whether it is a transaction tax or a capital gains tax, it will be difficult to treat non-owner-occupied homes the same way as homes people actually live in."

 

— Koo Yun-cheol, Deputy Prime Minister and Minister of Economy and Finance

구윤철 경제부총리 겸 재정경제부 장관

The government has once again signaled its intention to differentiate the tax treatment of ultra-high-priced homes, multi-home ownership and non-owner-occupied properties. Officials said they would rationalize the tax burden on homes used as primary residences while imposing additional levies on owners of expensive properties, multiple homes or homes they do not live in. With the government also indicating it would give affected owners a window to sell before new rules take effect, market watchers are asking whether the wave of distressed listings seen earlier this year — ahead of the reimposition of the capital gains tax surcharge on multi-home owners — could return.

Deputy Prime Minister and Minister of Economy and Finance Koo Yun-cheol made the remarks Monday afternoon at the second National Public Forum on Real Estate Policy, held at the Korea Chamber of Commerce and Industry in Jung-gu, Seoul, and chaired by Prime Minister Han Seong-sook. "We are thinking about how to design a fair and rational tax policy based on the value of a home and the purpose for which it is held," Koo said. "When people ask us to lower the capital gains tax in response to rising property holding taxes, we are willing to consider that for homes people actually live in — but for homes held for a long time without being occupied, or for multiple-home owners, we will consider differentiating the capital gains tax burden."

The market expects the government to scrap the long-term holding deduction — which currently reduces the taxable base by up to 40% for properties held over an extended period — and replace it with a system that counts only the years a homeowner actually lived in the property. A further tightening of the capital gains tax surcharge on multi-home owners is also widely anticipated. Ahead of any such overhaul, the government is expected to temporarily cut transaction taxes to give affected owners a chance to sell before the new rules take effect.

One option under discussion is reinstating the suspension of the capital gains tax surcharge on multi-home owners — which expired May 9 — through next year's property tax assessment date of June 1. The thinking is that such a move could revive the rush of distressed listings seen at the start of this year, expanding housing supply in the process.

Earlier this year, the prospect of the capital gains tax surcharge returning did prompt a surge in listings from multi-home owners in Seoul, pushing transaction volumes sharply higher.

According to real estate big data firm Asil, the number of Seoul apartments listed for sale jumped from around 55,000 at the start of the year to more than 80,000 after President Lee Jae Myung said he would not consider extending the capital gains tax exemption for multi-home owners. Once tax-motivated sellers had offloaded their properties and the surcharge took effect, listings fell back to 61,181 as of Monday — a decline of roughly 23 percent.

Experts are divided on whether that kind of distressed-listing surge can be repeated. Given the real estate market's tendency to price in sentiment early, they say, owners who were going to sell have largely already done so.

Lee Hyeok-jun, a managing director at NICE Credit Rating who attended the recent presidential forum on real estate policy, said the government had already played that card. "Those who did not sell in May have already decided to hold on," he said. "So a fresh wave of listings is unlikely."

Analysts also note that tight financial regulations limiting the ability to trade up make it difficult to prompt even non-owner-occupied single-home owners to sell.

Kim In-man, director of Kim In-man Real Estate Economic Research Institute, said single-home owners face a practical barrier. "If you sell your one home right now, you cannot buy the same kind of home again," he said. "A non-owner-occupying single-home owner is more likely to evict their tenant and move in themselves than to sell."

Meanwhile, housing ownership statistics from the Ministry of Statistics show that as of end-2024, some 371,826 people living in Seoul owned two or more homes. Across the broader Greater Seoul metropolitan area, including Gyeonggi Province and Incheon, the figure rises to 1,053,421.


hss@heraldcorp.com