Final Confirmation of Transfer Tax Surcharge Policy
The government has made a final decision to end the grace period for the transfer income tax surcharge on multiple property owners as of May 9. Deputy Prime Minister Koo Yoon-chul announced policy measures based on the timing of purchase contract execution within regulated areas, solidifying this decision. This is being interpreted as reflecting the government's commitment to block speculative demand from multiple property ownership at its source and strengthen transparency in the real estate market.
This policy change is expected to have a significant impact on homeowners within regulated areas. The government maintains the principle of completely cutting off speculative demand through enhanced property holding taxes rather than inducing multiple property sales, with this approach aimed at stabilizing the real estate market.
Applicable Tax Rate System and Tax Burden Level
The transfer tax applied from May 10 will reach a substantial level with surcharges added to the base tax rate. Currently, the base tax rate for transfer tax under the Income Tax Act is set between 6-45% depending on the taxable income. Once the grace period ends, owners of two properties will face a 20 percentage point surcharge on the base rate, while owners of three or more properties will face a 30 percentage point surcharge.
Including local income tax, the maximum tax rate is known to reach 82.5%. This level effectively recovers most of the gains from property sales as taxes, which is expected to be a considerable burden for multiple property owners. Those holding high-value properties exceeding 1 billion won in taxable value are expected to face particularly heavy tax burdens.
Tax Amount Variations by a Single Day Difference
According to simulations released by the National Tax Service, the gap in tax burden is very significant. Based on a three-property owner who held properties for 15 years and made a 1 billion won capital gain, selling before May 9 would require payment of approximately 260 million won in transfer tax, but selling after May 10 would require payment of 680 million won. As a result, a single day difference increases taxes by 420 million won.
For two-property owners under the same conditions, the tax burden is analyzed to increase up to 2.3 times. This sharp change in taxes is increasing the likelihood of inducing property owners to withdraw listings or switch to alternative tax-saving methods.
Impact of Long-term Holding Special Deduction System
One of the biggest factors increasing tax burden is the complete exclusion of long-term holding special deduction benefits. The long-term holding special deduction is a system that favors property owners who have held their homes for extended periods, offering up to 30% deduction of capital gains depending on the holding period. This system is known to have significant tax-saving effects and has been utilized by many long-term holders.
However, once subject to transfer tax surcharges, property owners cannot receive these deduction benefits regardless of how long they have held the property. Therefore, even multiple property owners who have held their homes for many years cannot take advantage of long-term holding benefits, which is expected to significantly increase their perceived tax burden.
Government's Principle Adherence and Market Impact
President Lee Jae-myung defined real estate issues as a "cancer preventing social development" at a cabinet meeting, clearly stating his firm stance. The end of the transfer tax surcharge grace period is being interpreted as a measure reflecting the government's principled approach. The president emphasized the necessity of perfect and fair policy implementation through the expression that "even the smallest crack can cause a dam to collapse."
With the government choosing principle over transfer tax relief, the variables and strategies in the real estate market are expected to become increasingly complex after May 10. Some express concerns that property listings from multiple owners will be withheld more severely, but the government demonstrates strong determination to push forward with the policy, stating "if this doesn't work, I cannot lead national affairs." Public attention is focused on what changes this transfer tax policy will bring to the real estate market during the remaining term.
This content is general information compiled based on publicly available materials. Please confirm official announcements from relevant agencies for accurate details.
