President Lee Jae-myung's Property Tax Remarks Put Real Estate Market on Edge

President Lee Jae-myung directly mentioned property tax via social media (SNS). He stated that real estate speculation poses a threat to the national economy and ordered strict, comprehensive measures to be taken, mobilizing all tools including taxation, finance, and regulations.

The government is reviewing measures to increase property taxes to counter potential property lock-in effects and a rebound in housing prices that could occur after May 9, when the grace period for heavy capital gains tax on multiple homeowners concludes.

South Korea's effective property tax rate stands at 0.15%, which is lower than that of major countries including the United States (0.83%), the United Kingdom, and Japan. To strengthen property taxation, proposed adjustments via presidential decrees include increasing the official property value realization rate and the fair market value ratio. Hong Jeong-hoon, a researcher at the Korea Institute for Urban Studies, stated that the progressive tax rate cap for high-value homeowners should be abolished and the fair market value ratio should be returned to the previous administration's level to increase the tax burden on owners of high-priced homes.

The government plans to include real estate tax reform measures in its tax code revision bill, set to be announced in July.