Calls to revise the government's tax overhaul, which would scale back capital gains tax benefits for registered rental housing operators, have emerged from within the ruling party. The government left open the possibility of adjusting the system, saying it would ensure that no property becomes impossible to sell under the current rules.
Rep. Lee Eon-ju of the Democratic Party of Korea hosted a forum at the National Assembly on the 3rd with the Korea Housing Lessors Association, titled "Is the Registered Rental Housing Tax Overhaul the Right Answer for Housing Stability?" Criticizing the government plan, Lee said, "Policy must not itself destroy the trust of landlords who believed in the system and faithfully served out their mandatory rental periods."
Under the registered rental housing program, operators accept restrictions including mandatory rental periods and a cap of 5% on annual rent increases, in exchange for benefits such as exemption from heavier capital gains tax rates and preferential long-term holding deductions. The government has decided to phase out those benefits starting in 2028 as part of a broader property tax overhaul. Sung Chang-yeop, head of the Korea Housing Lessors Association, said, "The plan to scale back and abolish tax exemptions for registered rental housing should be withdrawn, and the heavier comprehensive real estate tax on multiple-home owners should be reasonably eased to maintain stability in the rental market."
Kim Man-soo, director of the property tax division at the Ministry of Economy and Finance, said, "The reduction in tax benefits applies only to purchased apartments located in regulated areas such as Seoul, and does not cover purchased low-rise multi-unit housing or officetels in Seoul." Kim added, "For cases where a property cannot be sold because a tenant is in place, we are considering allowing exceptions to the land transaction permit system and establishing a public real estate investment trust to buy the properties." Jang Mun-seok, an official in the private rental housing policy division at the Ministry of Land, Infrastructure and Transport, said, "Some argue that the reduction in capital gains tax benefits should be withdrawn altogether, but there were also comments that selling is difficult because the transactions are within regulated areas." He said an announcement regarding residency requirements under the land transaction permit system was likely to come soon.
