President Lee Jae-myung agreed on the need to review a plan to limit the capital gains tax exemption for first-generation, single-home owners, which currently applies without a cap on the number of times. He also said it is worth considering a temporary measure to offer smaller tax benefits than before to those who could not sell their homes by the end of the grace period for the heavy capital gains tax on multiple-home owners. He added that the so-called "marriage penalty," in which married couples are disadvantaged in loans and subscriptions, will be eliminated after a full-scale review.
Lee said this at the "national debate on real estate policy" held at the KBS annex in Yeouido, Seoul, on the 23rd. On the day, Lee Kwang-su, head of Gwangsune Real Estate Agency, proposed limiting the capital gains tax exemption for single-household, single-home owners to once in a lifetime. Lee said, "I do not know if it should be once in a lifetime, but giving unlimited chances seems problematic," adding, "It is worth considering limiting the number of times, or giving more the first time and less the second time."
A plan to set an aggregates cap on the tax-free benefit was also mentioned. Lee said, "There is merit to the point that even if high-priced homes are bought and sold multiple times, the same benefit should not be given," and asked policymakers to design a tight system.
Under current tax law, a single household can receive a capital gains tax exemption if it owns one domestic dwellings for more than two years and meets the requirements. For dwellings located in a designated adjustment area at the time of acquisition, a requirement to reside for more than two years may also apply. If the transfer price exceeds 1.2 billion won, tax is imposed on the portion corresponding to the ratio exceeding 1.2 billion won within the total capital gains. At present, the tax-free benefit can be received each time the requirements are met.
On May 9, Lee also raised the possibility of opening an additional exit for multiple-home owners who could not sell their homes until the grace period for the heavy capital gains tax on multiple-home owners ends. He said, "There are cases where listings are locked up due to heavy taxation and where people hold out expecting a change of administration," adding, "It is also true that we should create some exit or retreat."
However, he made it clear that the same benefits will not be granted again as those given to people who sold during the grace period. Lee said, "If the conditions are the same as for those who sold then, people who trusted the president could feel disadvantaged," adding, "We should consider giving a smaller benefit and offering a temporary chance to exit."
He also decided to revise systems under which people are disadvantaged in loans or housing subscriptions because of marriage. Lee said, "I heard that many young people do not register their marriage because it puts them at a disadvantage," adding, "I asked the prime minister to review all areas—whether loans, sales, or subscriptions—so that people do not become worse off just because they got married."
He again emphasized the need to strengthen property holding taxes. However, he drew a line at a plan to raise rates to advanced-economy levels all at once. Lee said, "To reach advanced-economy levels, we would have to raise holding taxes to at least triple the current minimum, which could trigger a situation similar to a riot," adding, "If we had normalized holding taxes in the past, housing prices would not have risen this much."
Regarding the phenomenon of demand concentrating on a single expensive apartment, the "one smart home," he said it is necessary to distinguish between dwellings for residence and dwellings for investment or speculation. Lee said, "Because a single home is treated the same whether expensive or cheap, a phenomenon has emerged where people efficiently buy one and enjoy investment gains," and noted that the appropriate tax burden on ultra-high-priced dwellings should be discussed.
At the national debate on real estate policy that day, a total of 140 people attended, including President Lee Jae-myung, government official, experts from academia, the media, and research institutes, and members of civic groups, influencers, and the general public.