Koo Yun-cheol, deputy prime minister and minister of economy and finance, said Monday that property holding taxes and transaction taxes "must strike a balance," adding that the government is "preparing to announce a property tax reform around the end of July."
Koo made the remarks in a radio interview, adding that the government is "looking at (the direction of tax reform) so that the housing market can be established around actual residents." The comments raise attention to whether the government will move toward raising the burden of holding taxes such as property tax and the comprehensive real estate tax, while lowering transaction taxes such as the acquisition tax and capital gains tax.
Koo's approach aligns with the direction of tax reform recommended by the Organization for Economic Cooperation and Development (OECD). Earlier, the OECD diagnosed in its recent "2026 Korea Economic Report" that "overall, Korea's real estate-related tax revenue is high." It recommended a revenue-neutral shift policy that reduces the proportion of property transaction taxes and increases the ratio of holding taxes.
However, property tax reform is a sensitive matter that could draw backlash from local governments, which receive comprehensive real estate tax allocations and directly collect the acquisition tax. The capital gains tax, a national tax, also amounts to about 16 trillion won annually (based on the 2024 settlement), making it a fact that the government finds a major overhaul burdensome. Yet if it delays real estate tax reform like past governments, distortions in the housing market cannot be resolved. This time, Koo must take the lead, persuade local governments, and put forward a fundamental solution.
The part the government must focus on in this property tax reform is stabilizing housing supply. Rather than encouraging a lock-in of listings through excessive punitive taxation, it is better to give sellers breathing room and induce existing homes to come to market in sufficient numbers. It should not stop at cutting transaction taxes only slightly while sharply strengthening holding taxes alone. Policies to boost new housing supply must be pursued in parallel. In particular, the processing of follow-up bills such as the amendment to the Urban Regeneration Act, which has long been stalled in the National Assembly since the government's "Sept. 7 Housing Supply Expansion Plan" announced last autumn, is urgent. Through close consultation between the ruling party and the government and active communication with the opposition, they must resolve to complete legislation on real estate tax law and housing supply within the regular National Assembly session at the latest.
