National Tax Service Commissioner Lim Gwang-hyun posted on social media advocating for a reduction of the long-term capital gains tax deduction for high-value property sales. The current policy allows single-homeowners selling properties valued over 1.2 billion won to receive up to 80% tax deductions based on ownership and residency duration. Lim stated that 87 out of the top 100 properties receiving the highest deductions are located in Seoul's Gangnam and Seocho districts, with one Gangnam property sale receiving over 20 billion won in deductions. President Lee Jae-myung has consistently criticized the policy, questioning on January 21st why tax breaks are given to those holding properties for investment rather than residence. The advocacy from both the President and the National Tax Service Commissioner increases the likelihood that the tax reform plan expected early next month will include reductions to this deduction system.
National Tax Service Commissioner Highlights Gangnam Deduction Concentration
Commissioner Lim Gwang-hyun disclosed that 87 out of the top 100 properties receiving the highest long-term capital gains tax deductions are located in Seoul's Gangnam and Seocho districts. The long-term holding special deduction applies only when selling properties valued over 1.2 billion won, as properties below this threshold are exempt from capital gains tax. Lim described the policy as the "ultimate inequality," citing a case where a single Gangnam property sale resulted in over 20 billion won in tax deductions. President Lee Jae-myung questioned on January 21st: "Why do we reduce taxes for those who don't even live in the property but hold it for speculation or investment purposes?"
Government Considers Multiple Tax Reform Measures
Woo Byung-tak, a senior advisor at Shinhan Bank Premium Pathfinder, stated that the government could limit the long-term holding special deduction by capping either the number of times it can be claimed or the total amount receivable. The government is also deliberating changes to the comprehensive real estate tax calculation method, shifting from a property count basis to total property value, and establishing new standards for ultra-high-value properties. The tax reform plan is expected to be announced early next month.
FAQ
What is the long-term capital gains tax deduction that South Korea's National Tax Service Commissioner criticized?
The long-term holding special deduction allows single-homeowners selling properties valued over 1.2 billion won to receive up to 80% capital gains tax reductions based on their ownership and residency duration. Commissioner Lim Gwang-hyun stated that 87 out of the top 100 properties receiving the highest deductions are in Seoul's Gangnam and Seocho districts, with one case involving over 20 billion won in deductions.
When did President Lee Jae-myung criticize the property tax deduction policy?
President Lee Jae-myung questioned the policy on January 21st, asking why tax breaks are provided to those holding properties for speculation or investment rather than residence. Following advocacy from both the President and the National Tax Service Commissioner, the tax reform plan expected early next month is likely to include reductions to this deduction system.
