South Korea to Exempt Multi-Home Owners from Heavy Tax if They File Sales Permits by May 9

Coverage Overview

South Korea's Cabinet has approved revisions to enforcement decrees that will exempt owners of multiple homes from higher capital gains taxes if they file for land transaction permits by May 9, according to Yonhap News Agency. The decision follows President Lee Jae Myung's proposal to allow extra time for property owners to sell before the heavier tax regime takes effect.

The grace period for owners of multiple homes in designated speculative areas will end as scheduled on May 9, but those who apply for permits by that date will be excluded from the higher tax. The maximum tax rate will reach 75 percent for capital gains on homes in designated speculative zones, primarily in the greater Seoul area, as part of the government's push to stabilize rising housing prices.

Key Claims

The government will exempt owners of multiple homes from higher capital gains taxes if they file for sales permits by May 9 | The Cabinet approved revisions to enforcement decrees on April 21, as reported by Yonhap. The maximum tax rate on capital gains in speculative areas will be 75 percent | Multiple Yonhap articles report this rate applies to multi-homeowners in designated zones. Sales transactions in Seoul's long-designated speculative zones must be completed by Sept. 9 or Nov. 9 | Yonhap's April 9 report says Gangnam, Seocho, Songpa, and Yongsan districts have a Sept. 9 deadline, while other newly designated zones have until Nov. 9. President Lee Jae Myung is committed to not tolerating speculative gains | Presidential chief of staff for policy Kim Yong-beom stated this at a press conference, per Yonhap. The government may keep tax benefits for one-home owners who temporarily reside elsewhere | President Lee hinted at this in a social media post and Cabinet remarks, citing work or children's education as valid reasons, according to Yonhap. Fresh mortgage curbs were imposed for multi-home owners in Seoul and neighboring areas | Yonhap reported this in the context of President Lee's clarification on one-home owners. The government has a large-scale housing supply plan | Kim Yong-beom highlighted this plan to prevent panic buying, as reported by Yonhap. The housing market may see slower price growth starting in May | Kim Yong-beom made this forecast, per Yonhap.

Perspectives

Government Perspective

President Lee Jae Myung has emphasized the need to curb speculative gains while providing relief for multi-home owners who actively seek to sell before the tax exemption expires. In Cabinet remarks reported by Yonhap, Lee suggested allowing tax relief applications by May 9, noting that the approval process makes sales difficult after mid-April. He also clarified that tax benefits may remain for one-home owners who temporarily reside elsewhere for unavoidable reasons such as work or education.

Presidential chief of staff for policy Kim Yong-beom forecasted that the housing market may see slower price growth starting in May, when the tax benefits end. He pointed to a sharp increase in homes listed for sale in affluent Seoul districts and said the government's policy stance is being reflected in the market. "President Lee is committed to not tolerating (those) expecting speculative gains," Kim said at a press conference, adding that housing is on a path to normalization.

Market Reaction

According to Yonhap, the announcement of the tax benefit withdrawal has led to a sharp increase in homes listed for sale in Seoul's most affluent districts, including Gangnam and neighboring areas, with prices trending downward there. Home sales in Seoul have more than doubled over the past several months compared with the average over the past five years, according to Kim Yong-beom.

Potential Concerns

While officials express optimism about slower price growth, fears have grown that the housing market may revert to sharp price increases once the tax benefits end. Kim acknowledged this risk but cited the government's large-scale housing supply plan, saying it will be carried out on schedule to prevent panic buying.

Background and Timeline

The heavier capital gains tax was temporarily postponed under the previous administration of President Yoon Suk Yeol and will resume after nearly four years. The tax applies to capital gains from the sale of homes owned by multiple-property holders in designated speculative areas, mostly in the wider capital region.

President Lee first suggested the exemption measure during a Cabinet meeting on April 6, according to Yonhap. He noted that many people believe both the approval and contract must be completed by the deadline, but the time required for approval applications makes property sales difficult after mid-April. "I'm not sure there's a need to approach it that way. While maintaining the deadline, we could consider allowing cases where applications are submitted by May 9," Lee said.

The finance ministry announced the measure on April 9, specifying that sales transactions in Seoul's long-designated speculative zones -- Gangnam, Seocho, Songpa, and Yongsan districts -- must be completed by Sept. 9. For other Seoul districts newly designated in October, owners have until Nov. 9 to complete transactions.