Seoul: The government has announced a grace period ranging from four to six months for owners of multiple homes ahead of the scheduled termination of a temporary exemption from heavy capital gains taxes. This was confirmed by the finance ministry on Thursday.

According to Yonhap News Agency, the temporary exemption is set to end as planned on May 9. President Lee Jae Myung has emphasized the importance of stabilizing the escalating housing prices and curbing real estate speculation, especially in the greater Seoul area. This policy has led multiple property owners to sell their homes to avoid substantial tax liabilities.

Jo Man-hee, a senior finance ministry official, stated that all property sale contracts signed post-May 9 will incur heavy capital gains tax, but a grace period will be provided based on rental circumstances. The ministry highlighted that the new measures aim to enhance system consistency and reduce public inconvenience, considering the challenges associated with selling tenant-occupied homes and the necessity to bolster tenant protections.

The measure specifies a four-month grace for properties in Seoul's Gangnam and Yongsan districts and extends up to six months for newly designated speculative zones across other Seoul districts and parts of the Gyeonggi Province. This grace period applies to cases where final payments are made or ownership is registered within the designated timeframe.

For homes with existing tenants, the government will temporarily relax owner-occupancy requirements under the land transaction permit system. Many rental properties in South Korea use the "jeonse" system, where tenants pay a significant lump-sum deposit, refundable in full after a minimum two-year lease.

Currently, capital gains taxes on real estate sales vary from 6 to 45 percent. Owners of two homes in speculative zones face an extra 20 percentage points, while those with three homes incur a 30 percentage-point surcharge in addition to the base rate. Addressing housing prices remains a critical issue for the Lee administration, with President Lee committed to stabilizing the market to prevent young people from giving up on marriage and childbirth due to rising home costs.