Ahn Cheol-soo: “The 5.3 trillion won reconstruction excess profit recapture bomb must be abolished immediately”

[Financial News] Ahn Cheol-soo, a People Power Party lawmaker, criticized the Reconstruction Excess Profit Recovery System on the 11th as “a law born of hostility toward reconstruction” and called for its abolition.
Ahn said on Facebook that “the reconstruction excess profit recapture bomb has been dropped across South Korea,” adding, “As of last August, the recapture amounts notified to 79 project sites nationwide alone totaled 5.3 trillion won, more than three times last year’s 1.7 trillion won in Comprehensive Real Estate Holding Tax on housing.”
The reconstruction excess profit recapture system recovers part of the excess profits generated by reconstruction through levies. It was introduced in 2006, during the Roh Moo-hyun administration, and since then its implementation has repeatedly been deferred and the system overhauled.
Ahn argued that it was unfair to impose hefty levies based on rising prices in surrounding areas when homeowners had not sold their homes and realized any actual gains. The reasoning was that there was no basis for collecting a separate levy when owners pay property tax on their new apartments and will also pay capital gains tax if they sell them in the future.
Ahn also raised a fairness concern: unlike redevelopment or remodeling, reconstruction alone is subject to levies based on unrealized gains. The requirement to pay the levy in cash within six months of the date it is imposed was also identified as a problem.
Ahn also criticized the Lee Jae-myung administration, saying, “It calls for housing supply while making reconstruction, a major pillar of supply, difficult through all manner of regulations, then cracks the tax whip once more against people trying to build new homes—a contradictory course of action.”
Ahn stressed that “if there is no intention of refunding the levy if home prices plunge, the reconstruction excess profit recapture system deserves to be abolished.”

[email protected] Kim Gyeong-min Reporter