Land Minister Considers Allowing Transactions for Non-Resident Single-Home Owners

President Says "'Gap Investment Permission' Criticism Is Excessive"

Minister of Land, Infrastructure and Transport Kim Yoonduk stated, "Ahead of fundamental institutional reforms, we plan to review exceptional measures to allow non-resident single-home owners, among others, to be exempt from land transaction permit requirements from the perspective of fairness in selling opportunities."

On the 10th, the first day that the capital gains tax surcharge was implemented in designated adjustment areas, Minister Kim posted on his social networking service (SNS), refuting concerns in the market about a potential freeze in property listings and signaling additional policy measures. Currently, all of Seoul and some adjacent areas in Gyeonggi Province are designated as land transaction permit zones, so buyers must actually move in within four months after purchase. However, for multi-home owners, the move-in requirement may be deferred until the existing tenant's contract ends.

This measure was introduced to facilitate easier sales for multi-home owners with tenant-occupied properties. There has been ongoing debate that similar arrangements should also apply to non-resident single-home owners who lease out their homes while living elsewhere themselves. Minister Kim's remarks indicate an intention to institutionalize such an exception.

Notice regarding capital gains tax posted at a real estate agency in Songpa-gu, Seoul on the 10th. Photo by Yonhap News Agency

Since these transactions involve properties with tenants, the structure is similar to 'gap investment.' On May 11, President Lee Jaemyung commented on his SNS, "It seems excessive to call this a permission for gap investment." The rationale is that, because the move-in grace period is limited to two years and the full purchase price including the deposit must be paid within that period, these transactions should be regarded as genuine purchases for occupancy.

Minister Kim also noted, "The Ministry of Economy and Finance will examine the appropriateness of the permanent capital gains tax exemptions granted to rental business operators from the perspective of tax fairness." For homes registered as private rental properties before September 2018 that meet certain conditions, such as limiting annual rent increases to within 5%, these are not subject to the capital gains tax surcharge after fulfilling the mandatory rental period. However, Kim indicated that granting these benefits indefinitely is excessive and said the government plans to phase them out gradually. Amendments to the relevant income tax laws are anticipated.

Minister of Land, Infrastructure and Transport Yoon-duk Kim visited the Korea Land and Housing Corporation (LH) apartment construction site in Hapgang-dong, Sejong City on the 4th to inspect the quality management and supply status of construction materials. Photo by Yonhap News Agency

Minister Kim further announced that, in relation to housing supply measures, the government aims to complete legislative procedures before the end of the first half of the parliamentary session. Numerous legal revisions are required to implement various projects included in last September's 9·7 Housing Supply Expansion Plan and this year's 1·29 Urban Housing Supply Plan, but institutional improvements have yet to be finalized due to sluggish bipartisan agreement. In areas where projects have been confirmed, such as Gwacheon and Taereung, progress remains slow due to opposition from local governments and residents.

In addition, Minister Kim emphasized that the current environment differs from the past, citing stringent stabilization measures such as tighter loan regulations and transaction restrictions, rising mortgage rates due to higher global bond yields, and the establishment of robust enforcement systems to maintain market order. He noted that, although property listings declined and prices rose after the previous administration's capital gains tax surcharge policy, leading to skepticism about its effectiveness, this time will be different. Minister Kim stated, "Whether or not the capital gains tax surcharge is implemented is just one of many factors influencing housing price trends. We will pursue policies to create a safe housing market for genuine buyers through sustained short- and long-term supply expansion."

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