Lim Kwang-hyun, Commissioner of the National Tax Service, said the special long-term holding deduction for single-home households needs to be revised, ahead of the government's announcement of its real estate tax reform plan. He cited the deduction's "regressivity," which grants excessive benefits to owners of high-priced homes, noting that 90% of the total deductions went to Seoul, with about 80% of that concentrated in the Gangnam 3 districts and Yongsan-gu.
Releasing 2024 capital gains tax filing statistics on his social media account X, formerly Twitter, on the 26th, Lim said, "The long-term holding deduction was introduced to ease the tax burden on single-home owners who have held their properties for a long time, but it has now become a structure that delivers excessive benefits to ultra-high-priced homes."
Under the current system, single-home households selling a property with an actual transaction price exceeding 1.2 billion won can deduct up to 40% each based on holding period and residence period, for a combined maximum of 80% of capital gains. There is no separate ceiling on the deduction.
According to the statistics, 24,816 single-home households nationwide received the long-term holding deduction in 2024, with total deductions reaching 5.032 trillion won. Of this, 4.5 trillion won was deducted in Seoul alone, accounting for about 90% of the total.
The concentration in specific areas was even more pronounced within Seoul. Deductions in the Gangnam 3 districts—Gangnam, Seocho, and Songpa—and Yongsan-gu totaled 3.5 trillion won, meaning 78.6% of all long-term holding deductions in Seoul were concentrated in these areas.
The gap between districts was also stark. In Gangnam-gu, 2,873 cases received the long-term holding deduction, for a total of 1.5459 trillion won. The average deduction per case reached 540 million won. By contrast, Dobong-gu had just two cases, with total deductions of only 20 million won. The average deduction per case was 10 million won.
The concentration of benefits on ultra-high-priced homes was also confirmed. Among the top 100 cases by deduction amount, 99 were homes located in Seoul, with Gangnam-gu accounting for 68 and Seocho-gu for 19. The average deduction was 4.1 billion won in Gangnam-gu and 3.3 billion won in Seocho-gu. In particular, there was a case in Gangnam-gu where more than 20 billion won was deducted through the long-term holding deduction on the sale of a single home.
Lim pointed out that this structure does not align with progressivity, a basic principle of taxation. He argued that the higher the home price, the larger the capital gains and the larger the deduction, resulting in a structure in which owners of high-priced homes receive greater tax savings. "Taxation is based on the principle of progressivity, under which those with higher incomes bear more taxes, but the long-term holding deduction has produced regressivity that fully guarantees unearned income," he said, criticizing that "the system is encouraging a 'one premium home' approach."
He continued, "Seventeen years have passed since the long-term holding deduction rate for single-home households was expanded to a maximum of 80%," stressing that "while the purpose of protecting the middle class can be maintained, the current system, which effectively provides unlimited benefits even to ultra-high-priced homes, needs to be revised."
In response, the government is also examining whether to reform the long-term holding deduction in the tax reform plan to be announced later this month. "We are reviewing various alternatives," a government official said.
