President Lee: Claims That Abolishing the Long-Term Holding Deduction Would Hit Single-Homeowners With a Tax Bomb Are "Blatant False Propaganda"

\r\n
[The Financial News] On the 18th, President Lee Jae Myung strongly pushed back against the planned abolition of the Capital Gains Tax long-term holding special deduction, saying, "The claim that abolishing the special deduction for long-term holding would be a tax bomb for single-homeowners who actually live in the property is logically inconsistent and blatant false propaganda."
Through X (social network) that day, Lee shared a news report saying that opposition parties had strongly objected after a bill was introduced by the ruling bloc to abolish the Capital Gains Tax special deduction for long-term holding for single-homeowners, and he rejected the claim.
He wrote, "People should not be deceived by such lies in an attempt to rationalize a false argument that hides an unfair purpose. That is especially true for politicians and journalists who bear public responsibility."
He continued, "The Capital Gains Tax long-term holding special deduction is a system that sharply reduces Capital Gains Tax solely because an asset was held for a long time, regardless of whether the owner lived there. There is a separate system that reduces Capital Gains Tax for long-term residence." He added, "Therefore, the claim that abolishing the special deduction for long-term holding would be a tax bomb for single-homeowners who actually live in the property is logically inconsistent and blatant false propaganda."
Lee asked, "If you bought a house not to live in but to make money, and the price rose, isn't the profit something you should naturally pay tax on? Why should that tax be cut sharply just because you held it for a long time?" He added, "Unless you are defending real estate speculation, there is no reason to argue for a Capital Gains Tax cut simply because someone held a property for a long time. Wouldn't it be better to cut earned income tax for people who worked hard for a long time instead?"
\r\n\r\n
Lee said, "If earned income, the reward for a year of honest labor, exceeds 1 billion won, nearly half is paid in tax. But it goes against justice and common sense to sharply cut taxes on unearned real estate speculation income worth tens or even hundreds of billions of won simply because it was held for a long time, regardless of residence." He then asked again, "Do you say abolishing the special deduction for long-term holding would freeze listings?"
He said, "That could happen if it were suddenly abolished all at once, but if it is phased out gradually and step by step, giving people time to sell, the problem is solved." He explained, "For example, if the deduction is abolished but implementation is suspended for six months, then only half is abolished for the next six months, and after one year it is fully abolished, the system would reward those who sell quickly. That would not freeze listings; it would encourage them."
He also emphasized, "If the law makes it impossible to revive the special deduction for long-term holding, a change in administration would not allow the president to alter it at will, so there would be no point in waiting it out." He added, "For legitimate homes, such as a single home occupied as a primary residence or a home temporarily unoccupied because of work, the burden on investment and speculative real estate should be strengthened to advanced-economy levels. Then the longer one holds it, the greater the loss will be."
He also wrote, "If loans for real estate speculation are completely blocked, existing loans are strictly recovered, and holding costs are normalized, today's excessively high real estate prices will inevitably return to normal." He added, "Until now, real estate has been almost the only way to build wealth, but now there are excellent alternatives as well." This was interpreted as a reference to the capital market, including the KOSPI Composite Index, which recently climbed back above 6,000 points and has been holding up well despite the Middle East war crisis.
Lee asked, "Do you really plan to keep holding out while carrying these risks and burdens?" He concluded, "The decision is free, but the economic cost should be carefully calculated."
cjk@fnnews.com Choi Jong-geun Reporter