President Lee Jae-myung said that he is "not considering an extension at all" regarding the "exemption from the additional tax on owners of multiple dwellings," which ends on May 9. The system imposing additional capital gains tax on owners of multiple dwellings was introduced in 2021 under Moon Jae-in's administration, but when Yoon Suk-yeol took office, the enforcement decree was revised to defer it in the interest of "stimulating dwelling sales," and it was extended annually. If this system is reinstated, owners of multiple dwellings must sell their holdings and settle the balance before the sunset to avoid the additional capital gains tax.
Lee made his position on real estate policy known on the 23rd on X (formerly Twitter). Currently, when owners of multiple dwellings trade dwellings, the additional capital gains tax portion ranges from a minimum basic rate of 6% to a maximum of 45%. In designated adjustment areas, an additional 20 percentage points is applied to owners of two dwellings and 30 percentage points to owners of three or more dwellings. Including the 10% local income tax, the top rate for owners of three dwellings is 82.5%. Unlike former President Yoon Suk-yeol, who deferred applying these added rates, Lee signaled there is no need for further extension.
Lee said, "Even a single dwelling varies," adding, "If we inevitably have to tweak the tax system, wouldn't it be fair to treat nonresidential and residential differently?" He went on, "Not only multiple dwellings, but even a single nonresidential dwelling, if it is for investment or speculation rather than residence, then tax cuts for long-term holding seem odd," adding, "The long-term holding special deduction system blocks listings and encourages speculation."
In particular, he wrote, "It is not something to change the tax system right away," but also, "These are topics that need discussion. What do you think?" With the president directly mentioning the issue, it effectively signals the government intends to review a restructuring of the tax regime.
◇ Weight on "regulation of owners of multiple dwellings" also at the New Year's press conference
At the New Year's press conference on the 21st, Lee also expressed a negative view of tax benefits such as the long-term holding special deduction for owners of multiple dwellings. Lee said, "It seems a bit odd to cut taxes just because one holds for a long time real estate for undesirable investment or speculation." He added that while the government will not rush to overhaul real estate taxes immediately, it could use tax measures if a "necessary situation" arises.
He also said, "If asked whether to apply (real estate) taxes or not, the answer is that we may or may not," adding, "As much as possible, taxes are a means to secure national finances, and it is not desirable to repurpose them as regulatory tools." Even so, he said, "If it is absolutely necessary and an effective tool, and the situation requires it, there is no reason not to use it just because it is not desirable. I hope such a situation does not arise if possible."