Heavy capital gains tax on multiple home owners returns... top rate for owners of three or more homes could exceed 80%

\r\n[Financial News] As the heavy capital gains tax on multiple home owners in Areas Subject to Adjustment is reinstated, attention is turning to its impact on the real estate market. The measure is being resumed about four years after a temporary suspension in 2022.
According to government ministries on the 10th, the tax break on heavy capital gains tax that the government had been operating ended the previous day, and the heavier tax system for multiple home owners in Areas Subject to Adjustment was reapplied from today.
As a result, multiple home owners selling homes in Areas Subject to Adjustment must pay an additional heavy tax on top of the regular capital gains tax rate. The current base rate ranges from 6% to 45%, depending on the taxable income bracket. An additional 20 percentage points are added for owners of two homes, and 30 percentage points for those with three or more homes. Including local income tax, the effective rate for owners of three or more homes could exceed 80%.
To prevent a drop in real estate transactions and a shrinkage in listings, the government has temporarily exempted the heavier tax since May 2022. It later extended the suspension in light of market conditions, but decided not to extend it further.
However, some exceptions remain for multiple home owners who are already in the process of selling. If they have completed an application for permission in a Land Transaction Permit System area, they will be excluded from the heavier tax as long as the transaction is completed within the designated period.
The 21 districts in Seoul and 12 areas in Gyeonggi Province that were newly designated as Areas Subject to Adjustment under the Oct. 15 real estate measures last year must complete transactions within six months of signing a contract. In the existing regulated districts of Gangnam-gu, Seocho-gu, Songpa District, and Yongsan District in Seoul, the transfer process must be completed within four months to qualify for the benefit.
Deputy Prime Minister of the Republic of Korea and Minister of Finance and Economy Koo Yun-cheol said at a recent Deputy Prime Ministers and Ministers Meeting on Economy and Real Estate, "There are concerns that listings may dry up after May 9, but speculative buying has been blocked at the source through loan regulations and the Land Transaction Permit System, and expectations for home price increases are also weakening," adding, "We will create an environment where transactions for actual residence can proceed smoothly."
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banaffle@fnnews.com Yoon Hong-jip Reporter