Seoul: The government has announced a four- to six-month grace period for owners of multiple homes ahead of the scheduled end to a temporary exemption from heavy capital gains taxes. The Ministry of Economy and Finance confirmed this decision, emphasizing the importance of stabilizing rising housing prices and curbing real estate speculation, especially in the greater Seoul area.
According to Yonhap News Agency, the temporary exemption will conclude on May 9, as planned, with President Lee Jae Myung stressing the necessity of this measure. The policy has led to a surge in property sales by multi-homeowners seeking to avoid the impending tax burdens. The Ministry of Economy and Finance stated, "To ensure policy predictability and credibility, the exemption will end as originally scheduled. At the same time, supplementary measures have been prepared to improve consistency between systems and minimize public inconvenience."
The grace period will differ based on location, with a four-month period for properties in Seoul's upscale Gangnam and Yongsan districts and up to six months for newly designated speculative zones. The grace period applies to transactions where final payments are completed or ownership registration is finalized within the specified timeframe.
Additionally, for homes currently occupied by tenants, the government plans to temporarily relax owner-occupancy requirements under the land transaction permit system. In South Korea, many rental properties operate under the "jeonse" system, where tenants provide a large lump-sum deposit refundable at the end of a minimum two-year lease.
Currently, capital gains taxes on real estate sales range from 6 to 45 percent. Multi-homeowners in speculative zones face additional surcharges, with two-homeowners incurring an extra 20 percentage points and three-homeowners facing a 30 percentage-point surcharge.
Housing prices remain a critical issue for the Lee administration, as the president has committed to stabilizing the market. Lee has expressed concerns that soaring home prices are deterring young people from pursuing marriage and starting families.