South Korea to Review Tax Benefits for Rental Apartment Operators Amid Market Stabilization Efforts

The South Korean government is signaling a shift in its real estate policy, with Deputy Prime Minister Koo Yun-cheol suggesting a review of tax benefits for rental apartment business operators in designated adjustment areas. This move comes as the government prepares to end the tax deferral for multiple homeowners on May 9th, a policy change expected to increase capital gains taxes significantly for those selling properties in regulated zones.

Koo Yun-cheol stated that the government is exploring various options to address concerns that the exemption from heavy capital gains tax for owners of purchased rental apartments in adjustment areas is excessive from a tax equity perspective. The aim is to encourage the release of currently held properties onto the market and ensure these become available to actual residents.

The government views the current real estate market as transitioning from past overheating to a new phase centered on actual residents. Following the announcement of the end of the capital gains tax deferral for multiple homeowners, there has been an observed trend of these owners releasing their properties, which are then being purchased by first-time homebuyers, creating a virtuous cycle.

Despite some concerns about a potential freeze in the property market after May 9th, the government asserts its policy stance remains firm. With loan regulations and land transaction permit systems in place to prevent speculative buying, and with expectations of housing price increases diminishing, the government is committed to expanding housing supply in Seoul and the surrounding metropolitan area while simultaneously blocking speculative demand and fostering an environment conducive to transactions for actual residents. Furthermore, market supervision will be strengthened through regular crackdowns and inspections on real estate irregularities.