[비즈한국] In the real estate market, there is a word more terrifying than 'price': 'uncertainty.' Prices may fluctuate, but if regulations change without notice, the market grinds to a halt. The date currently facing the market is May 9, 2026. This is because the temporary exemption on heavy capital gains tax for multi-home owners in designated adjustment areas is set by law to expire on that date. The enacted amendment to the Enforcement Decree of the Income Tax Act essentially extends the exemption period from 'May 9, 2025' to 'May 9, 2026.' This means that unless further measures are taken, the system will 'revert' starting with transfers made on May 10.
However, we must remain calm. Policy often wavers between 'certainty' and 'prospects.' In the past, the government has actually drawn a line regarding reports on economic policy directions (or similar annual plans) by stating that “nothing has been decided.”
In other words, today's market carries both the fact that “May 9 is the institutional deadline” and the possibility that “whether it is extended may change during the political and policy process.” This dual uncertainty is the most certain prescription for freezing transactions.
The core issue is not that the 'tax rate is high.' The more fundamental question is this: How will the 'heavy capital gains tax' operate in the current market environment? In other words, will May 9 be a day that 'draws out properties' or a day that 'locks them away'?
The meaning of May 9: Will raising taxes increase property listings?
The heavy capital gains tax for multi-home owners is a system that adds a surcharge to the basic tax rate (6-45%) when someone who owns two or more homes in a designated adjustment area sells a property. When the heavy tax resumes, a 20% point surcharge is added for owners of two homes and 30% points for owners of three or more. The fact that the effective top tax rate, including local income tax, could reach 82.5% is delivering a strong shock to the market.
Also mentioned is the structure where long-term holding special deductions are excluded for the transfer of property by multi-home owners in adjustment areas.
The policy goals of this system are generally explained in two ways. First, the goal is to increase the 'incentive to sell' for multi-home owners to increase supply and stabilize prices. Second, it aims to reduce demand by lowering 'expected returns' through punitive taxation on investment demand. However, these two goals often conflict in practice. To encourage sales, transaction costs must be low. Conversely, if transaction costs are high, the 'reason to sell' disappears. In other words, the very idea of raising transaction taxes to induce sales could be structurally contradictory.
In particular, the 'market constitution' is different this time. Many areas are already bundled as regulated zones, and apartment transactions are constrained by strict requirements such as land transaction permits.
Lending conditions are also rigid. Some reports state that funding has become difficult due to 40% LTV and 40% DTI limits.
In a market where people 'cannot buy even if they want to,' the signal to 'sell' is more likely to cut off transactions rather than increase them.
Why 'transaction cliffs' may come before 'distressed sales'
As the May 9 deadline approaches, two opposing movements appear simultaneously. The first is 'last-minute listings.' This is a trend where multi-home owners, trying to finalize sales before May 9 to avoid the heavy tax, put their properties on the market even if it means lowering the price. The media fueled fear by citing cases where a three-home owner selling a Bundang apartment held for 10 years with a 1 billion won profit would face vastly different tax burdens before and after the grace period.
The second is 'holding out.' As taxes increase, it becomes harder for sales to exceed the break-even point, and for wealthy individuals, if their cash flow allows, the choice to “just hold on” becomes stronger. In fact, articles also raise observations that 'holding out' and 'gifting' can cause property lock-ins.
What is more dangerous in this phase is the moment when 'holding out' becomes more dominant than 'last-minute listings.' When transactions decrease, prices do not move in just one direction. Instead, 'properties that sell' and 'properties that don't' split within the same apartment complex, and prices remain as 'cases' rather than indicators. In a market with lower transaction volumes, record highs and distressed sales exist simultaneously. And market participants over-interpret only the most visible cases. It is a phase where 'perception' overwhelms 'fact.'
The cost left by a 20-year cycle
Historically, the heavy capital gains tax for multi-home owners has been close to a 'loop.' It has been noted that since its introduction in 2004, it has been repeated through deferrals, abolitions, revivals, and reinforcements depending on changes in government.
This repetition is not merely a change in a single tax item. Housing is not a commodity bought and sold every 1 or 2 years. It is a 10-year decision involving business, education, retirement, inheritance, and leasing. Nevertheless, if policy repeats a pendulum motion of 'strengthening—deferral—strengthening' every few years, the market begins to move based on 'reading the room' rather than 'rules.'
What happens when policy credibility collapses? First, transactions are swayed by 'announcements,' not taxes. Asking prices fluctuate on a single line of news like “they say they will extend it” or “they say they won't.” Second, the effect of taxes can be the opposite of the goal. Although it was intended to hit multi-home owners, analysis shows it reinforces the concentration of 'one smart home' and encourages the disposal of properties in the outskirts with relatively lower value. Third, as tax evasion shifts to 'gifting,' tax revenue may not increase as expected, and market liquidity may only drop.
Conclusion: 'Credibility of rules' moves the market more than the 'sword of taxes'
Tax is a policy tool. However, tools must be used according to the situation. In a phase where supply is insufficient and transactions have already decreased, the prescription of raising transaction costs further carries the risk of cutting off the market's blood flow rather than lowering prices. May 9 is not just a tax law event. It is a day where the policy is tested on whether it has the ability to restore the “cycle of transactions” and the will to provide predictable rules by communicating with the market.
Politics wants to show 'will' through taxes. But the market reacts to 'schedules' and 'rules,' not willpower. If another loop is repeated around May 9, the cost will not end with the tax burden of a specific group. Transactions will stop, price discovery will be distorted, rental costs will be passed on, and eventually, the end-user will pay the biggest price. What policy should truly target is not the 'multi-home owner' but 'uncertainty.' When uncertainty disappears, the market moves again.
Finally, I would like to emphasize that the system of heavy capital gains tax is not a matter of 'good or evil.' Curbing speculation is necessary. However, if the result of curbing speculation is a transaction cliff, rental instability, and increased costs for end-users to buy their own homes, the policy loses its purpose. The debate surrounding May 9 should eventually converge not on 'whom to target,' but on 'how to move the market.' Precise rules, sufficient notice, and consistent enforcement. Only when these three are in place does the market move by common sense, not by taxes.
Kim Hak-ryeol, head of the Smart Tube Real Estate Research Institute, known by his pen name 'Pashong,' served as a team leader at the Korea Gallup Real Estate Research Institute. He operates and hosts the Naver blog 'Pashong's World Exploration' and the YouTube channel 'Stew TV.' His books include 'Rewriting the Republic of Korea Real Estate User Guide (2025)', 'The Power of Gyeonggi 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)', 'Republic of Korea Real Estate Future Map (2021)', and 'From Now On, Only Where It Rises, Rises (2020)'.