Opposition Says Lee Jae Myung Could Face 600 Million Won in Capital Gains Tax if Long-Term Holding Deduction Is Scrapped

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\r\n[Financial News] The People Power Party estimated that if the long-term holding special deduction for one-home owners' capital gains tax is abolished, the tax on the sale of President Lee Jae Myung's apartment in Bundang District, Seongnam, Gyeonggi Province, would rise to 600 million won. It said excessive tax burdens would freeze the market and demanded that Lee apologize to the public and declare that he will not abolish the deduction.
Song Eon-seok, the People Power Party's parliamentary leader, said at a strategy meeting on the 21st that if the deduction is scrapped, even owner-occupiers with one home would have to pay the full capital gains tax without any deduction. He argued that the tax burden on Seoul apartments would increase by about ten times. Applying the same calculation to the apartment owned by Lee Jae Myung, he said the tax would reach 600 million won.
The long-term holding special deduction allows one-home owners with homes valued above 1.2 billion won to deduct up to 80% of their capital gains for tax purposes, but only if they sell after living there for 10 years.
Song cited Korea Real Estate Board (KREB) data showing that the average apartment price in Seoul rose from 540 million won in 2012 to 1.3 billion won this year. He said that if an average-priced apartment were sold after being occupied as a one-home residence, the current tax would be less than 1 million won, but if the deduction were abolished, it would exceed 10 million won.
He added, "Using the same standard, I calculated President Lee's Bundang Apartment. If it was purchased for 360 million won in 1998 and sold for 2.9 billion won in 2025, assuming one-home owner-occupancy throughout, the current capital gains tax would be estimated at 93 million won, but if the long-term holding special deduction is abolished, it would exceed 600 million won."
He went on to say, "Abolishing the deduction would effectively turn capital gains tax into a capital gains recapture tax and amount to seizing the public's assets." He added that if homeowners sell, most of the gains would be taken in taxes, making it impossible to buy a home of similar size and value. That, he said, would inevitably reduce supply and push home prices higher.
The controversy over abolishing the deduction began when Yoon Jong-oh of the Progressive Party, part of the broader ruling bloc, introduced a revision to the Income Tax Act containing the measure. Democratic Party of Korea lawmakers Lee Gwang-hee and Lee Joo-hee also signed on as co-sponsors, prompting the People Power Party to launch its attack. The Democratic Party of Korea said it had not reviewed any real estate tax reform, but the controversy intensified after Lee himself hinted on social networking service (SNS) that the deduction for non-owner-occupied one-home owners could be abolished.
Song said, "The Democratic Party of Korea has tried to calm things down by saying there was no discussion of abolishing the deduction, but once the local elections in June are over, it will use its majority to push through tax bomb legislation at any time." He added, "The president's claim that the deduction reduces capital gains tax simply for owning a home, regardless of whether it is occupied, is not true. The deduction rate changes depending on the number of homes and whether the owner lives in the property." He then urged Lee to apologize immediately and make a National Address promising not to pursue abolition of the deduction.
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uknow@fnnews.com Kim Yun-ho Reporter