The ruling party and government have decided to fully reconsider a plan to raise the property tax burden on owners of a single home who do not live in it, just 20 days after unveiling the tax revision bill. The move is read as a response to growing concern over waning momentum in state affairs, as the approval rating of the Lee Jae-myung administration has fallen to a record low. As a result, the government will move to raise back the basic deduction limit for the comprehensive real estate tax on single-home owners not residing in their property — which it had planned to lower from 1.2 billion won to 900 million won — and to ease the tax burden cap, which it had signaled would rise from 150% to 200%.
The Democratic Party, the government and the presidential office announced this at a high-level party-government meeting on the 23rd. The consultation ran for about two hours, from 11:30 a.m. to around 1:30 p.m. that day.
Under the agreement, the basic deduction limit for the comprehensive real estate tax on single-home owners who do not live in their property is likely to be restored from 900 million won to 1.2 billion won, or raised to 1.4 billion won, the limit for owners who live in their single home. Earlier, when the government unveiled its 2026 tax revision bill on the 3rd, it proposed lowering the basic deduction limit for non-resident single-home owners from 1.2 billion won to 900 million won, while raising the limit for owner-occupiers from 1.2 billion won to 1.4 billion won.
On this point, party leader Kim Min-seok offered his view: "For the comprehensive real estate tax, even if the current system is kept unchanged, the tax burden on non-residents rises naturally as official assessed prices go up, so why not improve it only by raising the basic deduction for owner-occupiers to 1.4 billion won." Democratic Party spokesperson Park Sung-jun also said in a briefing right after the high-level party-government meeting, "In the case of the comprehensive real estate tax, the Democratic Party strongly requested that no distinction be drawn between resident and non-resident single-home owners."
If the basic deduction limit for non-resident single-home owners rises from 900 million won to 1.2 billion won, owners of apartments with a market value below 1.7 billion won — with an official assessed price of around 1.2 billion won — would be excluded from the comprehensive real estate tax. If it rises to 1.4 billion won, apartments with a market value below 2 billion won would also be exempt.
The government will also move to expand the residency exceptions under the special long-term holding deduction for non-resident single-home owners. The government's tax reform plan included an exception clause recognizing up to three years of residency for single-home owners who, after living in their home for at least one year, move to another city or county for reasons such as school enrollment, a job change or transfer, medical treatment, an overseas stay or caring for parents. But there have been calls to recognize this more broadly. Observers say cases such as living elsewhere for childcare, child-rearing or family caregiving could also be included as grounds for recognizing residency.
The party and government also decided to ease the tax burden cap on the comprehensive real estate tax. The government had earlier said it would raise the cap from 150% to 200% year on year. With lawmakers from the greater Seoul area leading calls to lower it back to 150%, there is a possibility it will be restored.
In addition, the party and government decided to readjust the fair market value ratio, which had been slated to rise in stages from the current 60% of the official assessed price to 70% in 2027 and 80% in 2028. Park, the spokesperson, explained: "The tax burden cap was set at 200% from the previous 150%, and there were discussions about what to do going forward, and about whether to set the fair market value ratio at 60% or 70%," while adding, "Since this is not a finalized stage, I will speak about it later."
The party and government also decided to pursue a revision to the urban renewal law that would grant the authority for redevelopment and rebuilding projects of fewer than 500 households to district office heads. Currently, the designation of renewal zones is handled by the Seoul city government under the urban renewal law.
If the authority to designate renewal zones is transferred to the autonomous districts, project speed is expected to pick up through faster licensing. After Chung Won-oh, the Democratic Party candidate in the June 3 Seoul mayoral election, proposed such a measure, Ryu Sam-young, the head of Dongjak District and a Democratic Party member, is said to have recently asked the Seoul city government to transfer the zone-designation authority to the autonomous districts. Park, the spokesperson, said, "All 25 district office heads in Seoul are said to want the authority transferred," adding, "If we give the heads of basic local governments the authority to carry out redevelopment and rebuilding for cases of 500 households or fewer, wouldn't private redevelopment and rebuilding also become possible?"
To expand housing supply, the party and government are also viewing favorably a plan to extend the floor area ratio incentives applied to public renewal projects to private projects. The People Power Party has proposed raising the floor area ratio for private renewal projects to as much as 1.3 times the legal cap.
At the meeting, a plan to use the Yongsan Park site for housing supply was also discussed. However, Park, the spokesperson, said, "No conclusion has been reached on how it will ultimately be handled."
The reason the government decided to fully reconsider its tax reform plan just 20 days after unveiling the tax revision bill is cited as the recent sharp fall in President Lee's approval rating. In particular, the approval rating in Seoul, where high-priced apartments are concentrated, fell into the 30% range after the tax revision bill was announced.
According to a Gallup Korea poll of 1,004 people aged 18 and over nationwide conducted on the 18th through the 20th (with a margin of error of ±3.1 percentage points at a 95% confidence level), the positive assessment in Seoul was 32%, down 10 percentage points from the previous week. By contrast, the negative assessment in Seoul rose 9 percentage points, from 47% to 56%.
Park, the spokesperson, said, "Any politician naturally knows that the fall in approval ratings is a fallout from public sentiment on real estate," adding, "The fact that we said not to discriminate between non-residents and residents on the comprehensive real estate tax can also be interpreted, from this perspective, as a shared understanding between the government and the party." Further details can be found on the website of the National Election Survey Deliberation Commission.
