Cheong Wa Dae Says Ending Long-Term Holding Special Deduction Is Not Government Policy; “One-Home Owners Who Live in Their Homes Will Be Protected”

Cheong Wa Dae said it has no connection to a bill introduced by 13 lawmakers from the ruling bloc regarding discussions on reforming the long-term holding special deduction for housing capital gains tax. The bill’s key point is to abolish the deduction based on ownership period and instead apply it according to the length of actual residence. Cheong Wa Dae said it is only considering a reform of the deduction and added, "We will make sure there is no problem with protecting housing for one-home owners." Still, it left open the possibility of a system centered on actual residence.
At a press briefing at Chunchugwan on the 4th, Kim Yong-beom, Chief Presidential Secretary for Policy, said, "The part involving the long-term holding special deduction, which was proposed by Rep. Yoon Jong-oh of the Progressive Party, has nothing to do with the government, and the deduction will of course remain in place."
Kim added, "Residence and ownership are both set at 40% deduction, and the question is whether that really fits a restructuring of the housing market around actual residence." He continued, "It is completely untrue that the long-term holding special deduction itself will be changed or that the deduction for actual residence will be reduced." He also said, "When the deduction is restructured around actual residence, there are cases we can refer to in considering how to treat people who do not actually live there, but we need to gather more opinions." He added, "We will make sure there is no problem with protecting the housing of ordinary one-home owners who use it as their actual residence."
As the temporary suspension of the capital gains tax surcharge on multiple-home owners is set to be abolished on the 9th, there are concerns that a so-called "listing freeze" could occur. Kim said, "I do not think that after the 9th, the number of listings will fall and then suddenly rise again as before." He added, "If expectations grow that excess returns from holding real estate for investment purposes will never be tolerated, listings will come out." He also noted that "sentiment about future real estate prices is important."
The market has recently shown different trends by region. According to the Korea Real Estate Board (KREB)'s weekly apartment price trend for the fourth week of April, apartment sale prices in Seoul rose 0.14% from the previous week. In the three Gangnam districts, Seocho-gu turned upward for the first time in 10 weeks after Songpa District, while Gangnam District remained in decline but narrowed its drop.
Kim also said, "In the past one to two weeks, Gangnam and Songpa turned positive, and last week Seocho also turned positive." He added, "It is just a sign that the three Gangnam districts and Yongsan District, which had been suppressed for two months, are returning somewhat to their own trend." On the outskirts of Seoul and in Gyeonggi Province, he said, "Transactions are active in 14 districts on the outskirts of Seoul and 10 districts in Gyeonggi Province," adding that "homes priced below 1.5 billion won are largely in demand from younger buyers seeking homes for actual use."
Behind Cheong Wa Dae's rejection of the sharp-rise theory is President Lee Jae-myung's repeated messaging on real estate. On January 23, the president wrote on X (formerly Twitter), "Even one home is still one home," and added, "Shouldn't non-residential and residential properties be treated differently to be fair?" He then said, "We are not considering any extension of the capital gains tax exemption for multiple-home owners that expires on May 9," and added, "If a one-home owner is not living there but is using it for investment or speculation, it seems odd to give a tax break just because it was held for a long time." He also said of the long-term holding special deduction, "The system blocks supply and encourages speculation," adding, "We are not going to change the tax system right away, but it is a topic we should discuss." He was setting out a standard that distinguishes between one-home owners who actually live in their homes and non-residential holdings kept for investment.
With the June 3 local elections approaching, public sentiment on real estate could also weigh on the ruling bloc. However, Cheong Wa Dae appears to be placing more weight on maintaining its existing stance of blocking speculative demand and protecting end-user buyers rather than pursuing short-term measures ahead of the election.
Nam Hyuk-woo of the Woori Bank Real Estate Research Institute analyzed, "Since the number of non-resident one-home owners in Seoul is estimated at 830,000 households, some listings would appear inevitable if regulations are imposed on them."
Reporters Seong Seok-woo, Choi Ga-young and Choi Jong-geun