As the government changes the long-term holding special deduction system, even single-homeowners who have held an apartment for a long time could see a sharp increase in capital gains taxes. For example, even if someone held a standard national-size apartment (84㎡) in Banpo-dong, Seocho-gu, Seoul, as a single home for 10 years and lived there the entire period, the transfer tax would quadruple in three years.
On the 3rd, an analysis of a simulation by Woo Byung-tak, a senior advisor at Shinhan Premier Pathfinder (tax accountant), by ChosunBiz found that if someone purchased an 84㎡ exclusive-use Raemian Firstige for 1.6 billion won, held and lived in it for 10 years, and sold it for 5.6 billion won, the transfer tax would rise from the current 241.85 million won to 449.85 million won in 2028 and 944.85 million won in 2029.
This is because the government plans to overhaul the deduction in a way that increases the capital gains tax burden on high-priced (official value over 1.4 billion won) dwellings even if they have been held for a long time. The government plans to abolish the holding-period deduction of the long-term holding special deduction, integrate it into a residency-period deduction, and reduce the deduction cap to 2 billion won in 2028 and 1 billion won in 2029.
Apgujeong Hyundai Apartment shows an even larger increase. If someone purchased a 131㎡ exclusive-use Apgujeong Hyundai 1st complex for 1.7 billion won and sold it for 6.5 billion won, the transfer tax would rise from the current 311.97 million won to 1.32046 billion won in 2029, an increase of more than 1 billion won. Even for a 84㎡ exclusive-use Jamsil Els, if someone held it for 10 years, purchased it for 800 million won and sold it for 3 billion won, this year's 269.93 million won transfer tax would jump to 463.83 million won in 2029.
Even if the government's tax reform plan reduces buying interest mainly for ultra-high-priced large units, there are concerns that demand could shift toward segments with a lighter property tax burden. Woo said, "As demand for ultra-high-priced dwellings moves to high-priced dwellings, a balloon effect could emerge that sequentially pushes up prices."