The chance has grown that the government will tweak plans to increase the tax burden on single-home owners who do not live in their own dwellings. The ruling party is reconsidering differentiating the comprehensive real estate tax by whether the owner resides or not, and is asking for broader recognition of unavoidable reasons for nonresidence when levying capital gains tax. In the market, some say that if the tax code is eased, worries about a drop in jeon- and wolse listings could lessen, but owners would also have less reason to sell, which could spur sale prices.
According to the government and the real estate industry on the 25th, the ruling bloc and the government are discussing supplementary measures to the Aug. 3 tax overhaul plan, which includes increasing the tax burden on single-home owners who do not reside.
Kim Min-seok, leader of the Democratic Party of Korea, said at the 10th high-level party-government meeting on the 23rd, "A thorough deliberation is needed on the tax overhaul that would adjust the basic deduction for the comprehensive real estate tax on nonresident single-home owners from 1.2 billion won to 900 million won and raise the comprehensive real estate tax cap to 200%." Park Sung-joon, the party's chief spokesperson, said after the meeting, "For the comprehensive real estate tax, the party strongly requested that there be no distinction between residents and nonresidents for single-home owners."
Under the government plan, the basic deduction for the comprehensive real estate tax for resident single-home owners would rise from 1.2 billion won to 1.4 billion won, while for nonresident single-home owners it would be cut to 900 million won. The cap on the comprehensive real estate tax burden would also increase from 150% to 200% of the previous year's tax.
The special long-term holding deduction for capital gains tax will also shift to focus on years of residence. In 2028, 6% will be deducted per year of residence and 2% per year of holding; from 2029, the holding-period deduction will be abolished and only 8% per year of residence will apply. The ruling party says the scope of recognizing periods not lived in due to unavoidable reasons—such as job relocation, children starting school, and supporting parents—as residence periods should be expanded.
The market is watching to see whether the tax plan will be revised. The head of a licensed real estate agency in Apgujeong-dong, Gangnam District, Seoul, said, "Since the tax plan was announced, owners who were weighing whether to sell or evict tenants and move in themselves have been putting off their decisions."
According to the big-data platform Asil, Seoul apartment jeon and wolse listings fell 3.4%, from 39,048 on the 3rd to 37,728 on the 24th. Songpa District fell 7.9%, Seocho District 6.5%, and Yongsan District 4.7%.
Experts said that if the tax burden on nonresident single-home owners is eased, owners would have less need to evict tenants and move in themselves, which could also calm anxiety in the jeon- and wolse market.
Kim Hyo-seon, chief real estate expert at KB Kookmin Bank, said, "Even if deregulation does not change the market's broader direction, anxiety in the jeon- and wolse market could ease somewhat."
On the other hand, the volume coming to the sale market could shrink more than expected. That is because as owners' holding burden falls, the reason to rush a sale disappears.
A real estate expert who requested anonymity said, "There is still no small amount of pent-up demand and market liquidity," adding, "If regulations on nonresident single-home owners are eased significantly, owners may pull listings or raise asking prices and wait, which could translate into upward pressure on home prices."