South Korea announced a reform of the comprehensive property tax and capital gains tax to shift the tax basis toward market value [1].
This policy change marks a significant departure from previous strategies designed to curb speculation by penalizing the quantity of homes owned. By focusing on the property's total value rather than the number of units, the government intends to alter the dynamics of the national real-estate market [1].
Under the previous administration, the tax system focused on a punitive approach for those owning multiple properties. The new framework aims to modernize this structure to ensure the tax burden aligns more closely with the actual wealth represented by the property's market price [1].
Yoon Ji-hae, the research head at Real Estate 114, said that the tax system is inherently complex. She said that in the past, specifically during the Moon Jae-in government, taxes were levied punitively based on how many houses a person owned [1].
Yoon said the current reform changes this focus so that the tax is based on the value of the assets rather than the number of homes [1]. This shift is expected to influence how investors and homeowners manage their portfolios, as the financial penalty for holding multiple lower-value properties may decrease while the cost for high-value luxury estates remains a priority [1].
Government officials said that the goal of the reform is to modify the tax structure to reflect a more accurate assessment of property value [1]. The move is designed to stabilize the market by removing the specific deterrents tied to house counts, which some analysts argue had created artificial bottlenecks in the housing supply [1].
“The government announced a reform... shifting the tax basis from the number of owned houses to the property’s market value.”
This shift represents a pivot from a regulatory approach aimed at discouraging multi-home ownership to a wealth-based taxation model. By decoupling tax rates from the number of properties owned, the government may encourage a more fluid real estate market, potentially reducing the incentive for owners to hold onto properties solely to avoid punitive tax brackets, while still capturing revenue from the highest-value assets.
