"Sold Early Trusting President Lee, Lost Tens of Millions... Public Outrage Grows over Temporary Easing of Capital Gains Tax Surcharge"

Temporary Easing of Surcharge on Multiple-Homeowners for Two Years
Lee: "Different from Previous Surcharge Exemptions"
Early Sellers Protest, Saying "Lost Out on Capital Gains"

President Lee Jae-myung listens to remarks from participants during the government ministry briefing held on the 4th at the Blue House State Guesthouse. Photo by Yonhap News

The government's decision to temporarily ease the capital gains tax surcharge on owners of multiple homes through the 2026 tax law revision has sparked criticism over the credibility and consistency of its policy. On online forums, commenters have noted, "Considering the recent increase in apartment prices, even if you sell now and only face a 5 percentage point surcharge, you can make tens of millions of won more than if you had sold before the surcharge was eased." President Lee Jae-myung has also directly countered criticism of the plan to temporarily relax the capital gains surcharge for multiple homeowners, stating, "This is different from the previous blanket exemption of the surcharge."

On August 4, President Lee cited the Ministry of Economy and Finance’s press release on tax reform through the social networking platform X (formerly Twitter), saying, "Back in January, the government said this would be the last time for a multiple property owner exemption, so why are exceptions being made again? There are concerns over policy inconsistency." He clarified that although the capital gains tax surcharge rate is being eased, it is still applied, and therefore claims that the tax is being eliminated altogether are not accurate.

According to the government's tax reform proposal, the current surcharge rate for those with multiple homes stands at 20 percentage points for owners of two homes. This rate will be temporarily lowered to 5 percentage points in 2027 and 10 percentage points in 2028 before returning to 20 percentage points in 2029.

However, after these details were announced, online forums and the real estate market were flooded with complaints from owners who felt they were disadvantaged because they rushed to sell their properties before May. In regulated areas, the exemption for capital gains tax surcharges on multiple homeowners ended, and these owners were also excluded from special long-term holding tax deductions, making it much more advantageous to sell before May 10. Nevertheless, some owners who rushed the sale in January, trusting President Lee’s statements that there would be no further extensions of the tax relief, now say they have missed out on substantial gains and are voicing their frustration.

A member of "Real Estate Study," an online cafe for property investors, lamented, "From last fall to April this year, home prices in Seoul and Gyeonggi Province rose by at least 100 million to 300 million won, and only those who sold off their additional properties during that period ended up losing out." Another member, Mr. B, said, "I hurried to sell my home to avoid the capital gains surcharge, but the actual transaction price has increased by 180 million won since then. If I sold it now, even with the 5 percentage point surcharge, I would still have made several tens of millions of won more."

Early this year, when President Lee announced via social media that the capital gains tax surcharge exemption would end, a large number of multiple homeowner listings flooded the Seoul market. On January 1, 57,000 apartments in Seoul were listed for sale and that figure peaked at 80,000 in March. After the surcharge exemption period ended in May, the number of listings dropped to just over 60,000 as of this month.

Experts have taken a reserved stance on whether the policy lacks consistency, but they believe that public trust in the government’s policy will ultimately depend on the direction of housing prices. In other words, how successfully the government can curb housing price increases will be the true test of policy credibility. Woo Byung-tak, Senior Specialist at Shinhan Bank Premier Pass Finder, noted, "Unlike in previous cases where the surcharge was fully exempted, this time the rate is being eased in stages, so it’s hard to call this inconsistent policy. However, complaints are arising because home prices have continued to rise even after the exemption ended, meaning those who already sold missed out on additional gains." He added, "Ultimately, the evaluation of the government’s policy will hinge on whether it succeeds in stabilizing home prices going forward."

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