Tax exemption window for temporary two-home owners shortened to 2 years
Cabinet approves amendment, effective Thursday
Analysts see modest listing boost but doubt large-scale supply surge
Starting Thursday, homeowners in regulated areas who temporarily hold two properties — typically while trading up to a new home — must sell their existing property within two years to qualify for tax benefits. Industry watchers expect the shorter deadline to push some listings onto the market earlier, though tighter lending rules and stricter owner-occupancy requirements are seen limiting any large-scale supply surge.
The government approved four amendments to tax enforcement decrees, including revisions to the Comprehensive Real Estate Tax Act enforcement decree, at a Cabinet meeting on Tuesday. The amendments, a follow-up to the tax reform package announced in August, take effect this month.
Under the revised rules, temporary two-home owners who have held two properties in regulated areas since Aug. 4 must sell their existing home within two years to benefit from tax exemptions — including capital gains tax and comprehensive real estate tax breaks available to single-household owners. An exception applies when a homeowner in Seoul purchases a property outside a regulated area to become a two-home owner: in that case, the original three-year window to dispose of the Seoul property remains unchanged.
With the disposal deadline shortened, homeowners are expected to list their properties for sale earlier than before. However, some analysts say the effect on overall supply will be limited, given tightened lending restrictions and an additional requirement that buyers complete property registration within four months of receiving land transaction permits.
"In the past, many people took advantage of the temporary two-home status by buying their next home first and maximizing leverage," a real estate expert said. "Now, on top of lending restrictions, buyers also have to meet registration deadlines after receiving land transaction permits, which means many people end up having to sell their old home and buy the new one at the same time — making it much harder to become a temporary two-home owner in the first place."
Still, with price corrections emerging in Gangnam in recent weeks, prospective buyers and those looking to trade up from non-Gangnam areas or along the Han River belt are expected to find a wider range of purchasing options as they eye entry into the Gangnam market.
According to the Korea Real Estate Board, apartment prices in Gangnam-gu posted their steepest weekly decline in three years and eight months as of Sept. 21, falling 0.42 percent, as distressed sales increased following the tax reform measures targeting high-priced homes. Seocho-gu extended its losing streak to seven consecutive weeks, with a cumulative decline of 1.3 percent.
Kim Hyo-seon, a senior real estate specialist at KB Kookmin Bank, said the shift could benefit buyers targeting properties listed by those looking to move into Gangnam. "There could be a positive effect in that buyers gain more negotiating power," she said, adding that those planning to trade up should build a tighter timeline than before — factoring in how long it will take to sell their existing home and at what price.
Ham Young-jin, head of the real estate research lab at Woori Bank, said that even in northern Seoul, new apartments with an exclusive use area of 84 square meters are increasingly breaking the 2 billion won ($1.47 million) mark, prompting some owners of new builds to use their temporary two-home status — after meeting the two-year post-move-in requirement — to prepare a move into Gangnam. "I would advise these homeowners to list their properties earlier than usual, or to decide in advance how much of a price adjustment they can absorb, as part of a tax-saving strategy," he said.
hope@heraldcorp.com
