Tax Overhaul Sparks Fears of Soaring Seoul Rents, Declining Listings

The government is pushing for tax reforms that will expand tax benefits for homeowners occupying their primary residence while reducing them for those who don't. The base deduction for comprehensive real estate holding tax for owner-occupiers will rise from 1.2 billion won to 1.4 billion won, while the deduction for non-resident homeowners will decrease from 1.2 billion won to 900 million won. The tax credit for holding real estate as a single owner and the long-term special deduction for capital gains will shift from being based on holding period to residency period. Non-resident properties will be excluded from the long-term capital gains tax special deduction, with new deduction limits of 2 billion won in 2028 and 1 billion won after 2029.

The comprehensive real estate holding tax reforms will be implemented over two years starting in 2027, while the capital gains tax reforms will be phased in from 2028 to 2029 after a postponement in 2027.

Landlords, or their direct ascendants or descendants, will be able to refuse a tenant's request for contract renewal if they intend to occupy the property themselves. The intent to occupy will be determined by a comprehensive assessment of the landlord's current living situation, workplace, school, and preparedness for moving. New homeowners who inherit the landlord's status can also refuse renewal if they express intent to occupy within the legal timeframe. If a landlord evicts a tenant for reasons of personal occupancy and then re-leases the property to another party without justifiable cause, they will be liable for damages to the original tenant.

According to the nationwide housing price trend survey for June, the Seoul housing rental price index rose by 1.08% in one month. This is the first time the Seoul rental price has increased by more than 1% on a monthly basis since October 2013, with Seoul apartments showing a 1.37% rise. As of the 5th of last month, the number of apartments available for rent and lease in Seoul was 37,551 units, a 14.5% decrease compared to two years ago. As of June, the average rental price for housing in Seoul was 484.789 million won, with the median rental price at 418.535 million won.