Lee Hyungil, First Vice Minister of Finance, Says Real Estate Tax Plan to Be Announced Soon... Considering Halving Phase 3 New Town Procedures

Appearance on “Fact Mill,” the Presidential YouTube Program
Summary of the Real Estate Policy Forum Chaired by President Lee on July 23
Debate Over Property Tax Standards, Jeonse Loan Regulations,
and Relocation Loan Policies
Additiona

The government is set to announce plans for real estate tax reform soon, including changes to property holding taxes and capital gains taxes. Additionally, the government intends to incorporate opinions raised during the recent "National Real Estate Policy Forum" into policy after consulting with relevant ministries. These include easing regulations on jeonse loans, loosening restrictions on reconstruction and redevelopment relocation loans, and shortening procedures for the Phase 3 New Town project.

Lee Hyungil, First Vice Minister of the Ministry of Economy and Finance, is holding a joint briefing with related ministries on April 3 at the Government Seoul Building in Jongno-gu, Seoul, regarding regulatory improvement measures to resolve supply chain bottlenecks for emergency economic response. 2026.4.3 Photo by Cho Yongjun

On July 24, Lee Hyungil, First Vice Minister of the Ministry of Economy and Finance, appeared on the presidential YouTube program "Fact Mill," stating, "As for the tax system, we must make an announcement soon," and added, "In order for the bill to be reviewed in the National Assembly, it must be submitted by September 2 or 3 at the latest, and there is also a legislative notice period, so we will be making an announcement in the near future." Key areas under review are expected to include whether or not to strengthen property holding taxes, the scope of application, and changes to the special long-term holding deduction for capital gains tax.

He reported that the most active discussion at the forum the previous day took place in the tax sector. There were opposing views, with some calling for property holding taxes to be strengthened, while others raised concerns about market shock and the burden being passed on to tenants. There were also opinions that, if holding taxes were increased, capital gains taxes should be lowered as an "exit route" to encourage properties to be listed for sale on the market. During the discussion, President Lee specifically asked participants at what price range strengthened holding taxes should start to apply. Some suggested setting the threshold at twice or five times the national average house price.

President Lee further suggested that it may be unreasonable to classify all homes originally purchased for residential purposes as investment properties just because the owner is not currently residing in them. He proposed the idea of distinguishing between owner-occupied residences and "residential" versus "non-residential" homes, rather than simply "primary residence" homes.

In the finance sector, discussions focused on jeonse loan regulations and relocation loans for maintenance projects. President Lee acknowledged that while jeonse loans help ensure housing stability for ordinary citizens, unchecked expansion of such lending can fuel increases in jeonse prices and, in turn, push up housing prices overall, creating a vicious cycle. He therefore stated that regulatory action is needed. Regarding reconstruction and redevelopment relocation loans, he instructed financial authorities to review whether loan limits can be calculated not just based on the appraisal value of the existing home, but also by factoring in the estimated value of new homes to be built upon project completion.

Vice Minister Lee also noted that ways to shorten the timeline for the Phase 3 New Town housing project are under consideration. He relayed, "The President remarked that the procedures for Phase 3 New Town are extremely lengthy, and that internal reviews are underway on ways to reduce them by more than half."

When the need for additional housing site identification in the Seoul metropolitan area was raised, President Lee commented that he would personally take a helicopter to survey the region and see if there was land that could actually be utilized. Other topics discussed included converting quasi-industrial zones and knowledge industry centers for residential use, addressing bottlenecks in redevelopment and reconstruction, increasing the supply of non-apartment housing such as villas and officetels, and fostering professional private-sector long-term rental operators. Participants also called for improvement to business loans, housing unit calculations, and insurance subscription requirements to revive the non-apartment housing market, which has been hit by recent jeonse fraud scandals.

The forum, originally scheduled to last 100 minutes, actually went on for nearly 200 minutes. Lee explained that out of 140 attendees, about 28 spoke in person, and whenever an opportunity for questions arose, 20 to 30 people would raise their hands at the same time.

Meanwhile, approximately 5,000 opinions were submitted on the "RealEstatedebate.kr" website, which the government has been operating since July 14, with another 1,500 comments received just on the day of the forum. The government plans to continue collecting online feedback and will hold an additional forum chaired by the Prime Minister on July 27 to further elaborate plans for supply, finance, and tax system reform.

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