President Lee Moves to End Multi‑Home Tax Break, Tighten Capital Inflows
Updated (5 articles)
Tax Exemption for Multiple‑Home Owners Set to Expire May 9 President Lee announced on Jan 27 that the heavy capital‑gains tax exemption for owners of multiple homes will not be extended and will automatically expire on May 9, 2026. The exemption, introduced in May 2022 to stimulate the market, has been renewed each year until the current administration halted it. Capital‑gains rates now range from 6 % to 45 %, with an additional 20‑percentage‑point surcharge for two homes in speculative zones and a 30‑point surcharge for three homes. Lee emphasized that ending the relief is intended to remove “unfair benefits from an abnormality” and to normalize fiscal policy[1][2][3][5].
Cabinet to Review Limited Application for Pre‑Deadline Transactions Lee indicated that the upcoming cabinet meeting will consider allowing the exemption for property transactions completed before the May 9 deadline. This limited‑application proposal would let sellers who close deals early retain the tax break while preserving the overall phase‑out. The president stressed that any such concession would be narrowly scoped and not constitute a broader extension[3].
Government Plans Broader Measures to Curb Capital Inflows In the same cabinet session, Lee pledged a suite of actions to curb excess capital inflows into the housing market. Measures under review include ending tax breaks for multiple‑home owners, tightening financing rules, and accelerating new housing supply in the Seoul metropolitan area. The administration frames these steps as necessary to deter speculative buying and improve affordability[1][4].
President Warns Against Real‑Estate Bubble Echoing Japan Lee repeatedly warned that unchecked real‑estate speculation could push South Korea into a stagnation similar to Japan’s “lost three decades.” He cited Japan’s prolonged economic slowdown after its 1990s property bubble as a cautionary example for policymakers. The president’s rhetoric underscores the urgency of implementing steady, practical measures to avoid comparable outcomes[1][2][4].
Regulatory Overhaul Targets Productive Financing Lee also announced plans to overhaul financial regulations that currently restrict productive financing. The overhaul aims to streamline capital allocation toward growth‑enhancing sectors and to support the transition to a more efficient financing system. By easing unreasonable market rules, the government hopes to accelerate capital inflows that are aligned with economic expansion[1].
Sources (5 articles)
-
[1]
Yonhap: President Lee pledges measures to curb capital inflows into housing market: Details Lee’s Jan 27 Cabinet announcement ending the multi‑home tax exemption, warning against a Japan‑style bubble, and outlining regulatory reforms to promote productive financing.
-
[2]
Yonhap: President Lee Ends Multi‑Home Tax Exemption Ahead of May 9 Deadline: Explains the decision not to renew the exemption, its 2022 origin, senior aide’s reassurance that no new tax hike will occur, and the policy’s framing as fiscal normalization.
-
[3]
Yonhap: President Lee Rules Out Extending Capital Gains Tax Break for Multiple‑Home Owners: Confirms the firm stance against any extension, mentions possible limited pre‑deadline relief, and labels the exemption an unfair benefit.
-
[4]
Yonhap: South Korean Newspapers Highlight Housing Tax Push and Nominee Scrutiny (Jan 24): Reports broader housing‑tax reforms, the May 9 start date for higher capital‑gains taxes, and parliamentary scrutiny of a budget‑minister nominee amid ongoing price rises.
-
[5]
Yonhap: President says no extension of heavy capital gains tax exemption for multi‑home owners: Reiterates the non‑extension, outlines existing surcharge structure, and discusses fairness concerns raised by Lee during a Cheong Wa Dae meeting.
Timeline
May 2022 – The government launches a temporary capital‑gains tax exemption for owners of multiple homes to boost the real‑estate market; the relief is framed as a short‑term measure and is renewed each year thereafter. [3][2]
1990s‑early 2000s – Japan endures a prolonged economic slump after its 1990s real‑estate bubble bursts, a period President Lee later cites as a cautionary “lost three decades.” [1][2]
Feb 2025 – Lawmakers set the exemption’s original expiry for May 9, 2026, establishing a fixed deadline for the tax break. [3]
June 2025 – Lee Jae Myung assumes the South Korean presidency, inheriting the annually‑extended multi‑home tax exemption. [2]
Jan 22, 2026 – President Lee posts on X that extending the heavy capital‑gains tax exemption for multiple‑home owners “is not under consideration,” stresses fairness concerns about a three‑year exemption, and reaffirms the May expiry. [5]
Jan 24, 2026 – Budget‑minister nominee Lee Hye‑hoon appears before a parliamentary committee, denies fraud accusations over a housing application, and media report that the government will table new real‑estate taxes, with the higher capital‑gains rate to take effect on May 9. [4]
Jan 25, 2026 – President Lee tweets that the exemption will expire on May 9 as scheduled, rules out any extension, and announces an upcoming Cabinet meeting to consider applying the exemption to transactions completed before the deadline. [3]
Jan 26, 2026 – Lee officially decides not to renew the multi‑home tax exemption, describing the move as fiscal normalization; a senior aide clarifies it is not a new tax hike but notes the president could extend the relief for one or two years if needed. [2]
Jan 27, 2026 – At a Cabinet meeting, President Lee pledges measures to curb capital inflows into housing, reiterates that the May 9 exemption will end, warns against repeating Japan’s “lost 30 years,” frames a brief stock‑index rally above 5,000 points as market normalization, and promises regulatory overhaul to promote productive financing. [1]
May 9, 2026 (future) – The temporary exemption on heavy capital‑gains tax for multiple‑home owners expires, activating higher rates (6 %–45 %) plus 20‑point or 30‑point surcharges for two‑ or three‑home owners to deter speculative buying. [1][2][3][4][5]