President Lee's Announcement: No Extension on Capital Gains Tax Increase
President Lee stated, "There will be no extension... The capital gains tax increase will officially resume on May 9."
The government has pulled out the most powerful and final card, 'tax policy', to stabilize the real estate market. In particular, it has suggested an unprecedented exception based on the 'contract date', signaling to multiple homeowners to "sell now" amidst concerns about tight payment schedules.
1. Core of the policy: "The exit will be open, so leave now."
The resurrection of the capital gains tax increase: After May 9, when selling homes in designated adjustment areas, homeowners with two properties will face an additional 20% tax rate, while those with three or more properties will incur a 30% increase.
Contract date exception: Normally, capital gains tax is based on the payment of the balance or transfer of registration, but this time, the government plans to discuss a measure that exempts the tax if a contract is signed by May 9. This provides an additional 2-3 months of time.
2. Market's cold response: "Are we repeating past failures?"
Experts warn that this measure could distort the market. Concerns about a transaction cliff: Those who wanted to sell have already done so, and remaining multiple homeowners are likely to either 'gift' or 'hold on' to their properties, potentially leading to a complete disappearance of available listings.
The focus on 'one solid property' deepens: As tax pressures increase, multiple homeowners may start selling properties in peripheral areas (like provinces) and retain only key locations like Gangnam in Seoul or Bundang in Seongnam.
Paradoxical statistics: During the past implementations of increased capital gains taxes under the Roh Moo-hyun and Moon Jae-in administrations, Seoul's housing prices skyrocketed, leaving a strong learning effect among investors.
3. Impact on the Geomdan New Town and metropolitan market
Sale of provincial properties, concentration in the metropolitan area: As multiple homeowners offload non-core area listings, the funds generated may flow into key new complexes in the metropolitan area, such as the Geomdan New Town. Demand seeking "one solid property" may target leading apartments in Geomdan.
Pressure on jeonse prices: Homeowners feeling the burden of property and capital gains taxes may reflect those costs in the jeonse prices, increasing instability in the rental market.
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Source :https://blog.naver.com/mok9__office/224159851233
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