"Sell Before the Long-Term Holding Tax Break Is Cut" Surge in Sales by Long-Term Owners of High-Priced and Redevelopment Homes

Homeowners who have held their properties for long periods are increasingly putting them on the market. As tax benefits are set to be reduced and regulatory changes loom, more long-term owners are selling, especially in the Gangnam 3 Districts and other areas dense with redevelopment complexes.
According to data from the Court Registration Information Plaza on the 22nd, 3,690 out of 24,371 people who sold multi-unit properties (apartments, officetels, multi-family and row houses, etc.) in Seoul in February had owned their homes for more than 10 years. They accounted for 35.8% of all sellers. By holding period, those who sold after owning for more than 10 years but no more than 15 years numbered 1,734, or 16.8%, the largest share. They were followed by 952 sellers (9.2%) with holding periods of over 15 years and up to 20 years, and 1,004 sellers (9.7%) who had owned for more than 20 years.
By district, the Gangnam 3 Districts (Gangnam, Seocho, and Songpa Districts), along with Mokdong and Yeouido, where many redevelopment complexes are concentrated, accounted for a large portion of the sales. Seocho District had the highest share of long-term holders among sellers at 47.0% (197 people). It was followed by Gangnam District at 45.9% (238 people) and Yangcheon District at 45.0% (291 people). Songpa District had the largest number of long-term sellers in absolute terms with 368, followed by 291 in Yangcheon District, 247 in Gangseo District, and 238 in Gangnam District.
In particular, both the proportion and the number of long-term sellers are rising in the Gangnam 3 Districts. In Songpa District, the number of long-term sellers jumped from 220 in February last year to 368 this February, an increase of 67.3% (148 people), the highest growth rate. Their share among all sellers there climbed 6.2 percentage points, from 34.3% to 40.5%. In Seocho District, the number rose from 150 to 197, up 31.3% (47 people), and their share increased 9.1 percentage points, from 37.9% to 47.0%.
The number of long-term sellers with holding periods of more than 10 years has been steadily increasing in recent months. Their share was 33.4% in November last year, then 34.6% in December, 34.7% in January this year, and 35.8% in February. This trend is seen as being driven by the temporary suspension of the heavier capital gains tax on owners of multiple homes, which ends on May 9, and the announced plan to scale back the long-term holding special deduction. More owners are selling now to realize gains before the reduced deduction takes effect.
The reduction or possible abolition of the long-term holding special deduction is widely expected to move in the direction of eliminating tax benefits for non-resident single-home owners. Currently, a single-home household that has owned and lived in its home for at least 10 years can deduct up to 80% of its capital gains. Owners of multiple homes can receive a deduction of up to 30% if they have held a property for 15 years or more.
act@fnnews.com Choi Ah-young Reporter