The Democratic Party of Korea said it has not reviewed any tax code changes at the party level regarding the recently spotlighted plan to abolish the long-term holding special deduction. On President Lee Jae-myung posting on social media X (formerly Twitter) about a gradual phaseout of the deduction, the party noted it was "in the context of taking a cautious view of buying dwellings for speculative purposes."
Kang Jun-hyeon, senior spokesperson for the Democratic Party, told reporters at the National Assembly on the 20th regarding the abolition of the deduction, "The lawmakers who introduced the relevant bill number 10, including Yoon Jong-o of The Progressive Party, and our party has not reviewed any tax code changes at all."
Under Article 95 of the Income Tax Act, the deduction reduces capital gains tax by deducting a certain percentage of gains based on holding and residency periods when selling real estate such as an apartment that has been held for at least three years and occupied for at least two years. For households with one primary dwelling, up to 80% can be deducted.
Recently, the People Power Party raised its criticism, saying abolishing the deduction would amount to a tax bomb even for people with a single home used for actual residence. In response, President Lee countered that it was "false agitation," adding, "Unless one defends real estate speculation, there is no reason to argue for cutting capital gains tax just because a property was held for a long time," fueling controversy.
Kang said, "We need to look at the context of what the president wrote on X," adding, "First, the temporary easing of the heavy capital gains tax will be ended, and that is set by enforcement decree. Because it keeps changing with administrations under an enforcement decree, he was expressing a wish to elevate it into law."
He added, "Second, there are nonresident single-home owners and temporary single-home owners. The People Power Party claims that regarding 'long-term holding by nonresident single-home owners,' this means a complete abolition."
Kang said, "The president was speaking in the context of whether there is a speculative purpose or not," emphasizing, "President Lee's view on real estate policy is to take a cautious view of buying dwellings for speculative purposes."
He cast the People Power Party's claim as a "malicious frame." Kang said, "The People Power Party is putting a malicious frame on this, and it's a lie," adding, "How could it be a complete abolition when there are actual residents?"
Kang said the party will discuss sufficiently with the opposition regarding the special inspector requested by the presidential office. He said, "In the past, there was a case where the ruling party recommended one, the opposition one, and the bar association one," adding, "We will discuss this sufficiently with the opposition, including that option."
He said candidate nominations for by-elections will be completed by May 10. Kang said, "Candidate registration is May 13, and if we finish by May 10, only 20 days remain," adding, "Because campaign time is needed, we will announce in stages."