Review of 6-Month Postponement of Capital Gains Tax Surcharge on Property Transfers

Party and government, controversy date "Not an official review" confirmed, current tax rate until November

Kim Tae-nyeon, floor leader of the Democratic Party of Korea, is deep in thought after finishing his speech at the policy coordination meeting held at the National Assembly on the 7th. Photo by Yoon Dong-joo doso7@

[Asia Economy Reporter Jang Sehee] The Democratic Party of Korea and the government are reportedly considering postponing the application date of the capital gains tax surcharge by six months to encourage multi-homeowners to put their properties on the market. This follows news that the ruling party and government would temporarily ease the capital gains tax surcharge, with specific application periods now being suggested. However, the Democratic Party has drawn a line amid growing controversy over the temporary easing of the capital gains tax, stating that "there has been no official review."

A key Democratic Party official said on the 11th, "We cannot touch the comprehensive real estate holding tax, and easing reconstruction regulations will take a long time to show effects," adding, "Ultimately, temporarily excluding the capital gains tax surcharge for about six months might be an option."

The government decided through the July 10th measures last year to increase the capital gains tax surcharge starting this June, adding 20 percentage points to the basic capital gains tax rate for two-homeowners and 30 percentage points for three-homeowners to expand market supply. If the postponement of the capital gains tax surcharge is confirmed, the current capital gains tax rates will be maintained until November.

The ruling party and government are considering postponing the surcharge application by six months to temporarily increase supply and help stabilize the real estate market. Deputy Prime Minister Hong recently mentioned on a broadcast that "encouraging those who own three or four houses to put them on the market is also an important supply policy," which aligns with this approach.

In particular, the ruling party and government are also examining whether to include the six-month postponement of the capital gains tax surcharge in housing supply measures to be announced before the Lunar New Year holiday. This is because multi-homeowners need to dispose of their properties as soon as possible to receive reductions in the comprehensive real estate holding tax. Regarding this, Seo Jin-hyung, president of the Korea Real Estate Society and professor at Gyeongin Women's University, said, "Even if a surcharge is applied to newly acquired properties, the capital gains tax rate on the sale of existing homes must be lowered for properties to come onto the market."

However, the ruling party and government have officially drawn a line on this policy. A government official emphasized, "If the government temporarily suspends the part scheduled to be applied from June, policy credibility may decline," adding, "If real estate policies lack consistency, all future measures may fail to influence the market." The Democratic Party also issued an official statement on the same day, saying, "We are not considering easing capital gains tax for multi-homeowners," in response to criticism that there is "no principle."

This content was produced with the assistance of AI translation services.