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

Kwang Hyun Lim, Commissioner of the National Tax Service, stated that if multi-homeowners who have benefited from tax incentives under the Registered Purchase Rental Housing System are given opportunities to sell, it could result in the effective supply of 68,000 apartment units in Seoul.

Kwang Hyun Lim, Commissioner of the National Tax Service

The Registered Purchase Rental Housing System provided tax benefits to multi-homeowners who registered their properties as rental units, such as exemptions from heavy capital gains tax upon sale. However, due to its abuse for real estate speculation and the severe phenomenon of properties being locked up and withheld from the market, the system was abolished for apartments (new registrations are no longer permitted).

On the 21st, Commissioner Lim wrote on X (formerly Twitter), “The continued exemption from the heavy capital gains tax for multi-homeowners even after the end of the mandatory rental period is deepening the lock-up of properties. There are also convincing voices from the field stating that the current benefits are excessive, and that tax reductions during the rental period, along with limited benefits for a certain period after the rental ends, would be sufficient.”

Commissioner Lim added, “While a thorough review of the rental market is also needed, if we give registered multi-home landlords a chance to exit (sell), and a total of 68,000 apartment units in Seoul—combining those already deregistered with those scheduled to be deregistered—were supplied to the market, it would be a highly positive development.” He also noted that, for reference, the size of the urban supply of housing in the Seoul metropolitan area under the ‘January 29 Real Estate Policy’ is reported to be 60,000 units.

Commissioner Lim illustrated the issue with real-life cases. In 2014, Mr. A purchased two apartments in the Suseo district of Seoul for 500 million won each and registered as a rental business operator in 2018. The market prices for these apartments have since risen to around 1.8 billion won each, yet Mr. A has not sold them even after the end of the mandatory rental period. Similarly, Mr. B, who bought an apartment in Mapo-gu for 800 million won in 2018 and operated it as a registered rental property, has continued to hold onto the apartment even after the rental registration was automatically deregistered, with its value now having increased to about 1.6 billion won.

Commissioner Lim explained, “There is virtually no reason to sell,” adding, “This is because the heavy capital gains tax for multi-homeowners is not permanently applied, and favorable tax benefits—such as the special deduction for long-term holding—are still in place.”

Citing statistics from the Ministry of Data and Statistics, Commissioner Lim stated that about 27,000 privately owned apartments in Seoul that were operated as registered rental housing have been deregistered. Excluding approximately 2,000 units that are estimated to have already been sold, about 25,000 units are still being held. He further pointed out that by 2028, an additional 43,000 registered rental apartments in Seoul are expected to be automatically deregistered. He expressed concern that if the current system remains unchanged, the lock-up of properties could continue to recur.

Previously, President Lee Jaemyung stated in February, “Shouldn’t all tax policies for registered rental housing be the same as those for general rental housing once the rental period ends, in the interest of fairness?” expressing doubt about maintaining the exemption from the heavy capital gains tax for multi-home rental housing. He added, “Abolishing the exemption immediately would impose too much burden, so phasing it out or eliminating it after a certain period could be considered. There are also opinions to restrict the exemption solely to apartments.”

Kim Yongbeom, policy chief at the Presidential Office, wrote on Facebook the previous day that the Korean economy is experiencing an “unprecedented boom,” and emphasized the need for imagination and execution to connect normalized real estate taxation, corporate profits, and fiscal capacity to support vulnerable groups and future industries.

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