Time to restore principles to multi-home taxation

The South Korean government’s suspension of the capital gains tax surcharge on multiple-home owners, set to expire on May 9, was first introduced four years ago under the Yoon Suk-yeol administration. The measure was intended to encourage property sales by easing tax burdens. Although the relief has since been extended three times, it has failed to generate the expected increase in housing supply, while home prices in Seoul have continued to rise. Repeated suspensions have gradually normalized what was meant to be an exceptional measure. To stabilize the real estate market, uncertainty surrounding multi-home taxation must be resolved.

Over the past 22 years, the capital gains tax surcharge on multiple-home owners has been repeatedly adjusted in response to shifting market conditions. Introduced in 2004 to curb speculation, it was suspended after the 2008 global financial crisis. The surcharge was abolished in 2014 amid a prolonged market downturn, then reinstated in 2017 when liquidity and loan expansion drove prices higher once again. The 2022 suspension brought the system to its current state. This cycle of reversals has fostered a market expectation that the tax relief will be extended yet again.

President Lee Jae-myung said on Jan. 23 that he would not consider extending the exemption, reaffirming the May 9 expiration. Opposition lawmakers criticized the decision, arguing that aides to the president who own multiple homes should sell their properties first. Tax policy, however, must be predictable. Repeated reliance on temporary relief measures only deepens market confusion. With roughly three months remaining before the tax takes effect, allowing those who wish to sell sufficient time to do so, while enforcing the surcharge on those who choose to hold, is consistent with sound fiscal principles.

However, the Oct. 15 measures announced last year expanded regulated zones well beyond Seoul’s Gangnam region. In these newly designated areas, transactions require actual occupancy, making it difficult to sell homes currently leased to tenants. The government’s plan to grant three- to six-month grace periods for contracts completed by May 9 is intended to ease transactions and help increase housing supply. Authorities should continue to assess market responses while firmly upholding taxation principles.

President Lee criticized defenses of multi-home owners, saying, “Money may be called the devil, but it has not taken away even the devil’s basic conscience.” The real estate market, however, contains neither devils nor angels. Multiple-home owners should neither be vilified nor treated as a vulnerable group in need of special protection. Taxation must be grounded in principle, with legislative adjustments made only when clear problems emerge.

The prolonged suspension of multi-home taxation reflects the government’s and political parties’ failure to build a broader consensus on tax reform. While the capital gains surcharge remains enshrined in the Income Tax Act, its enforcement has effectively been suspended through administrative measures. The July tax revision should include steps to restore normal real estate taxation. Government intervention should no longer distort market expectations.