President Lee to Overhaul Real Estate Policies Next Month, Reinforces Tax on Luxury Homes

President Lee Jae-myung outlined his administration's real estate policy direction for its second year, focusing on curbing speculative demand and accelerating housing supply. Following local elections, Lee announced that measures related to property taxes, financial regulations, and housing supply expansion would be addressed comprehensively. He indicated that tax reforms, including adjustments to holding taxes, are expected in July.

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We plan to sort out taxes, finance, regulations, and supply all at once soon. Tax issues will likely be possible in July.

Lee reiterated his long-standing emphasis on strengthening property holding taxes for luxury homes and modifying the long-term capital gains tax deduction for single-home owners who do not reside in their properties. "While homes owned for residential purposes should be protected, it's a different story if they have become almost like luxury goods," Lee stated, arguing for holding tax burdens comparable to those in Western and developed countries. This suggests that the upcoming tax revisions may include stricter holding tax measures for properties exceeding a certain value, potentially around 3 billion won.

Reflecting on the impact of real estate policy on the recent local elections, Lee suggested that his administration's efforts to curb housing price surges had a more positive than negative effect on the election outcome. He dismissed the notion that opposition to property tax increases among high-value and multi-home owners was a new factor, characterizing it as a constant element. Lee also addressed the recent instability in the 'jeonse' (long-term rental deposit) market, describing it as a natural part of market normalization. He explained that the release of properties by multi-home owners after the temporary suspension of increased capital gains tax led to fewer available rental units as these were purchased by first-time buyers.

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Homes owned for residential purposes should be protected, but it's a different story if they have become almost like luxury goods. It is appropriate to impose holding tax burdens comparable to what Western and developed countries impose.

Despite the current challenges, Lee affirmed plans to stabilize the rental market for middle-income and low-income households by expanding the supply of affordable rental housing. He also noted the need to regulate excessive loan support for 'jeonse' deposits, indicating that regulations would be introduced to restrict new loans and renewals for speculative non-resident single-home owners.

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If I hadn't suppressed it through verbal intervention since January, housing prices would have skyrocketed. We have managed to block the upward pressure relatively well, and perhaps it had a better impact than a negative one on the election.