Lim Kwanghyun: "If Multi-homeowners with Registered Rentals Are Given Exit Opportunities, 68,000 Apartments Could Be Released in Seoul"

"If Multi-Homeowners Are Given a Chance to Sell Registered Rental Apartments,
It Could Supply 68,000 Units in Seoul"
"Exceptional Tax Benefits Like Capital Gains Tax Exemption and Special Deductions...
No Reason to Sell After Deregistration"
Calls for Tax Reform
"How Great Would It Be If These Units Were Supplied to the Market?"

Kwanghyun Lim, Commissioner of the National Tax Service, stated that if multi-homeowners who receive tax benefits through the acquisition-registered rental housing system are given opportunities to sell, it could result in an effective supply of 68,000 apartments in Seoul.

Kwang Hyun Lim, Commissioner of the National Tax Service

The acquisition-registered rental housing system granted tax benefits, such as exemption from heavy capital gains tax when multi-homeowners registered their properties as rentals. However, due to its misuse for real estate speculation and the severe lock-in effect on housing supply, the system was abolished for apartments, making new registrations impossible.

On June 21, Commissioner Lim wrote on X (formerly Twitter), "The benefit of exemption from heavy capital gains tax for multi-homeowners continues even after the rental period ends, which has exacerbated the lock-in effect." He added, "There are persuasive voices in the field that the current benefits are excessive and that tax reductions during the rental period and a limited benefit period after its expiration should be sufficient."

However, Commissioner Lim also said, "While a review of the rental market is necessary, it would be ideal if multi-homeowners with registered rentals are provided with an exit (sale) opportunity, so that a combined total of about 68,000 apartments in Seoul—both those already deregistered and those scheduled for deregistration—could be supplied to the market." He noted for reference that the size of urban housing supply in the Seoul metropolitan area under the "1·29 Real Estate Policy" is also around 60,000 units.

Commissioner Lim illustrated the issue with examples. Person A, who bought two apartments in Suseo, Seoul, for 500 million won each in 2014 and registered as a rental business operator in 2018, is still holding onto these apartments even though their market price has risen to approximately 1.8 billion won each, without selling them after the mandatory rental period ended. Similarly, Person B, who purchased an apartment in Mapo-gu in 2018 for 800 million won and operated it as a registered rental, has continued to hold the property even after the automatic deregistration, with its value now at around 1.6 billion won.

Commissioner Lim explained, "There is virtually no reason to sell," pointing out that "the heavy capital gains tax for multi-homeowners is not permanently applied, and advantageous tax benefits such as the long-term holding special deduction are still in place."

Citing statistics from the Ministry of Data and Statistics, Commissioner Lim noted that about 27,000 privately owned apartments in Seoul that were previously operated as registered rentals have been deregistered. Excluding the estimated 2,000 units that have already been sold, about 25,000 units remain unsold. He further stated that approximately 43,000 registered rental apartments in Seoul are expected to be automatically deregistered by 2028, raising concerns that the lock-in effect could continue if the current system is maintained.

Earlier, President Jaemyung Lee remarked in February that "after the rental period ends, the various tax schemes for registered rental homes should be the same as those for general rentals in the interest of fairness," questioning the continuation of the capital gains tax exemption for multi-homeowners with registered rentals. He also mentioned, "Immediately abolishing the exemption for registered rental apartments could impose an excessive burden, so phasing it out or eliminating it after a certain period is another option. Some propose limiting the benefit to apartments only."

Kim Yongbeom, the policy chief at the Presidential Office, described the Korean economy as experiencing an "unprecedented boom" in a Facebook post the previous day, and emphasized the need for creativity and execution to link normalized real estate taxation and corporate profits, as well as fiscal capacity, to vulnerable groups and future industries.

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