[비즈한국] In the summer of 2025, the atmosphere in the real estate market feels strangely heavy. While Seoul apartment prices have shown signs of a gradual recovery over the past few months, no one can guarantee whether this will solidify into a definitive uptrend or subside again after a brief spark. Trading volume remains low, and both buyers and sellers are keeping a wary eye on each other while biding their time.
In this uncertain market, the pressure investors feel most acutely is not price volatility, but taxes. This is especially true for those who own multiple homes. Regulations on multi-homeowners are shaking the foundations of the market, and they show no signs of changing anytime soon.
Regulations on multi-homeowners have become a structural reality in the Korean real estate market, rather than a temporary policy. Even as administrations change and political landscapes shift, the stance of strengthening taxes on multi-homeowners has remained firm. While institutional mechanisms such as the Comprehensive Real Estate Tax (Jongbu-se) and capital gains tax surcharges have seen periods of partial easing, the extent has been limited, and there has been no fundamental withdrawal.
Behind this lies a political economy that extends beyond simple tax revenue. In Korea, the issue of housing prices immediately escalates into a political problem. In particular, the housing dissatisfaction of voters in the metropolitan area is a sensitive variable that can change the direction of elections. The formula "tax relief for multi-homeowners equals skyrocketing housing prices" operates strongly within political circles. Policies regulating multi-homeowners are unlikely to cost votes, whereas easing policies can invite public criticism. Amidst this political calculus, regulations on multi-homeowners have survived regardless of shifts in power.
In this situation, multi-homeowners who have invested primarily in apartments find themselves in a bind. If they try to sell, the capital gains tax surcharge pulls them back. If they hold onto them, the Comprehensive Real Estate Tax notice weighs heavily on them. Ways to avoid taxes are limited, and the old strategy of simply repeating purchases and sales no longer works. Yet, one cannot just give up. The real estate market always cycles. If this is a wave of regulation, a wave of opportunity will eventually arrive. The question is whether one can build a structure capable of enduring until then.
Ultimately, what is needed during this period is not to own "many" properties, but to own "good" ones. In the early to mid-2010s, when utilizing leverage to secure multiple properties and aggregating capital gains was effective, volume was power. But now, as the number of holdings increases, the tax burden grows exponentially and erodes profits.
Owning "good" properties does not simply mean owning houses with great locations or brands. It refers to assets that are tax-efficient, have a high potential for long-term price appreciation, and can generate a stable cash flow while held.
Tax efficiency means minimizing the tax burden within the scope permitted by the system. For instance, the tax exemption rule for temporary two-home owners is still an effective way to save on taxes. If you purchase an apartment in a better location while keeping your existing home, you can avoid capital gains tax by selling the original home within two years.
Utilizing this rule can secure hundreds of millions of won in profits tax-free. However, the conditions are strict. The date of purchase, residency period, and timing of the sale must all meet legal requirements. If you fail to meet the criteria by even a single day, the exemption benefit vanishes. Therefore, if you plan to use a "trading-up" strategy, you must meticulously plan your relocation and finances.
Distributing the Comprehensive Real Estate Tax burden through family gifting is another method. Spreading housing ownership among household members via joint ownership between spouses or gifting to children can reduce the tax burden. However, gift taxes and acquisition taxes must be carefully considered. The National Tax Service has recently stepped up investigations into illicit gifting, so approaching this merely as a way to shift names could lead to an unexpected "tax bomb."
Incorporation is also a method some investors are considering. Holding houses under a corporate name can ease the burden of the Comprehensive Real Estate Tax and is advantageous for expanding rental businesses. However, if you do not account for corporate tax, dividend income tax, and incorporation/maintenance costs, it could actually end up being disadvantageous.
As important as reducing the tax burden is reading market momentum. No matter how high the taxes are, the investment remains valid if price appreciation exceeds them. The key is the ability to pick areas where growth is certain. This includes areas scheduled for GTX (Great Train Express) stations, regions slated for large-scale development, or areas where new supply is difficult due to regulations or geographic limitations.
Even if such regions experience short-term adjustments, demand remains steady in the long run. For example, some apartment complexes near stations before and after the opening of the GTX-A line recorded growth rates of over 30% to 50% over several years. Even after accounting for taxes, it remains a profitable venture. However, such opportunities disappear quickly, and competition is fierce. Ultimately, timing is key.
The next important factor is cash flow. The biggest risk in real estate investment is not being able to hold on during the holding period. If you cannot hold on, you end up selling at a loss before the market rebounds. Rental income is the essential fuel for "holding on." The transition from *jeonse* (lump-sum deposit) to monthly rent is now a trend of the times. Due to "empty *jeonse*" (where the deposit exceeds the property value) and *jeonse* fraud issues, tenants have come to prefer monthly rent, and the proportion of monthly rentals in the metropolitan area has already exceeded 50%.
For investors, stable monthly rental income is a huge help in covering property taxes and interest. Small apartments, studio apartments (officetels), and knowledge industry centers, in particular, have relatively lower management burdens and lower vacancy risks. Models like commercial-residential buildings, where you operate commercial rentals on the first floor and residential rentals on the upper floors simultaneously, are also effective for stabilizing cash flow.
Focusing only on apartments is risky. If you invest only in asset classes heavily targeted by regulations, your profit structure will be shaken by policy shifts. Therefore, it is advisable to diversify some assets into non-apartment real estate. Indirect investments like small retail shops, logistics center equity, or REITs allow participation in the commercial real estate market with relatively smaller amounts and help mitigate the volatility and tax burden of the apartment market.
Having an eye for reading the market is also crucial. The real estate market moves in conjunction with politics, interest rates, and policy. As political schedules like presidential or general elections approach, measures to expand supply or ease regulations to appeal to voters may emerge. When there are signs of interest rate cuts, buying sentiment revives. By comprehensively considering policy announcements and interest rate changes, you can time your entry at the bottom and exit at the top. However, it is important not to move impulsively in this process. There have been many cases in the past where people bought hastily on rumors that "regulations are finally easing," only for disappointment to follow when the actual easing was smaller than expected, leading to a flood of distressed properties.
In the end, the core of all these strategies can be summarized as "less, longer, and cash flow." Own fewer properties to reduce the tax burden, hold valuable assets for a long time to maximize price appreciation, and secure stable cash flow during that period. Owning "less" does not mean selling everything unconditionally; it means clearing out items with a high tax burden and low potential for price appreciation. Holding "longer" means not being swayed by short-term price fluctuations and waiting for the peak of the market cycle. Cash flow is the support that makes that waiting possible.
Multi-homeowner regulations will not disappear. But just because there are regulations does not mean there are no opportunities. The market is always moving, and even within changes, there are ways to make a profit. It is not about avoiding taxes, but about creating a structure that can remain profitable while absorbing the tax burden; that is the new competence required of apartment investors today.
Kim Hak-ryeol, director of the Smart Tube Real Estate Research Institute, known by his pen name "Pasyong," served as the team leader of the Real Estate Research Division at Gallup Korea. He operates and hosts the Naver blog "Pasyong’s World Exploration" and the YouTube channel "Stue TV." He is the author of books including "The Power of Gyeonggi-do Real Estate (2024)," "Absolute Principles of Seoul Real Estate (2023)," "The Future of Incheon Real Estate (2022)," "Kim Hak-ryeol’s Absolute Principles of Real Estate Investment (2022)," "Future Map of South Korean Real Estate (2021)," "Only Places That Will Rise, Rise from Now On (2020)," and "South Korea Real Estate User Manual (2020)."