The government's recent tax reform proposal signals significant changes in the real estate market. The plan aims to increase property tax burdens on high-value and non-residential properties while restructuring long-term capital gains tax exemptions to focus on actual residents. The intention to protect genuine homebuyers while imposing greater responsibilities on speculative holdings is understandable. However, there are considerable concerns in the market about reduced transactions and increased tax burdens. Policies are evaluated based on their outcomes, not intentions. The government must closely monitor market reactions and prepare supplementary measures.
Real estate policy has always been one of the most challenging tasks for any administration. When home prices rise, taxes are increased; when transactions decline, regulations are relaxed. Throughout this process, comprehensive real estate taxes, capital gains taxes, and acquisition taxes have been revised multiple times, and exemption systems have continually changed. Citizens have found it difficult to understand the complex tax laws, and the market has struggled to trust the consistency of policies. The real estate market is far more sensitive to future policy changes than to the current tax rates. When predictability is lost, both transactions and investments inevitably decline.
This tax reform, which emphasizes taxation based on actual residency, is a meaningful direction. However, expectations that the market can be moved solely through tax measures should be approached with caution. The instability in home prices in Seoul and the surrounding metropolitan area is the result of a combination of factors, including supply shortages, concentration of education, transportation, and job opportunities, and abundant liquidity. Strengthening taxes will not resolve supply shortages, and there are clear limits to controlling demand through taxation alone. The market considers not just tax policies but also supply, finance, economic conditions, and interest rates.
Particularly, the balance between property taxes and transaction taxes must be handled with care. If the burden of ownership increases while transaction burdens also rise, the market may see a decrease in available listings and a contraction in transactions. Suppressing speculation and hindering normal transactions are entirely different issues. Taxes should not be barriers that freeze the market but rather mechanisms that facilitate its normal operation. A market where individuals cannot act due to tax concerns is not a healthy market.
It is time for real estate policy to shift from a tax-centric approach to a comprehensive strategy. Revitalizing urban reconstruction and redevelopment is essential to expand the supply of quality housing, alongside enhancing transportation networks and industrial and educational infrastructure. Financial policies should strictly manage speculative loans while ensuring ample opportunities for genuine homebuyers, including young people, newlyweds, and first-time buyers. When supply, finance, and taxation align in the same direction, the market can find stability.
Good taxation is not about collecting more taxes. It is about creating a system that citizens can understand, accept, and sustain over the long term. If tax systems are significantly disrupted with each change in administration, citizens cannot plan their assets, and businesses and markets struggle to make long-term decisions. The real estate tax system should be viewed not as a short-term tool for responding to home prices but as a long-term national institution. The fundamental principles of tax equity, market functionality, and protection of citizens' property rights must be balanced.
The goal of real estate policy is not to artificially inflate or deflate home prices. The essence lies in creating an environment where citizens can reside stably, the market can operate normally, and genuine homebuyers are protected. Taxes should be designed based on the same principles. They are not a means to control home prices but a tool to stabilize the market. Both real estate and taxation should be approached with common sense, not politics. Only on a foundation of consistent principles that the market can trust can citizens' housing stability and the normalization of the real estate market be achieved.
* This article has been translated by AI.
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