[비즈한국] The recent developments surrounding the basic deduction for comprehensive real estate tax for non-resident single-home owners are highly significant. On August 3, the government announced that it would lower the basic deduction from 1.2 billion KRW to 900 million KRW. On August 26, it retracted this and reverted to maintaining the 1.2 billion KRW level. Then, on September 2, the ruling party announced that it would push for a plan to increase the threshold to 1.4 billion KRW across the board.
A policy changed three times in a month
This means the direction changed three times in just one month.
What happened in the market during this period? Landlords in the Gangnam area, worried about tax burdens, listed their properties at prices slashed by up to 300 million KRW, only to start inquiring with real estate agencies about whether they could cancel their sales once the revised plan was announced. Those who were a step late in their judgment lost 300 million KRW, while those who were a step faster protected their assets. The difference between the two was not the size of their assets, but the speed at which they read and judged the policy.
I do not believe this market structure is desirable. There is no room for debate on the principle that policies should be simple and predictable. However, the reality does not change just because principles are not upheld. Even at this moment, individuals must make their own decisions. Therefore, there is no choice but to study.
You cannot choose a house if you do not understand taxes
A notable phenomenon is emerging in the Seoul apartment market recently. There are cases of price inversion where 84㎡ exclusive-use area units are trading for more than 114㎡ units within the same complex.
At Cheonggye Byeoksan in Seongdong-gu, an 84㎡ unit traded for 1.71 billion KRW, while a 114㎡ unit traded for 1.56 billion KRW. The same phenomenon is observed at Sangam World Cup Park Complex 5 in Mapo-gu, SK Bukhansan City in Gangbuk-gu, Gwanak Woosung in Gwanak-gu, and Hong-eun Byeoksan in Seodaemun-gu. These price-inversion transactions have increased 2.6 times from 147 to 386 in one year, and the number of such complexes has grown from 84 to 162.
The cause is clear. Policy loans, including those for newborns, are concentrated on units with an exclusive area of 85㎡ or less, and the mortgage loan limit is divided based on the 1.5 billion KRW threshold. In fact, units priced at 1.5 billion KRW or less account for 80% of apartment transactions in Seoul, and in the northeastern region, one in three new high-price records comes from "national standard" size apartments.
Now, housing prices are influenced more by the location of thresholds set by policy than by the quality of housing or the value of the location. 1.5 billion KRW, 2 billion KRW, 4.6 billion KRW, 85㎡, 2.5 billion KRW. Every time a new line is drawn, demand concentrates below it, and the price of that concentrated segment rises.
If you do not understand tax and loan regulations, you cannot judge which segment will move. This is not a problem only for investors. It is an even more pressing issue for actual residents in that the housing options available with the same budget change, the price after several months changes, and the tax burden at the time of sale differs.
A structure where long-term residence becomes disadvantageous
As the long-term holding special deduction is converted to a long-term residence income deduction, a new deduction limit is being established: 2 billion KRW in 2028 and 1 billion KRW from 2029 onward.
Let's look at a concrete example. If a house acquired for 600 million KRW in 2003 and lived in for over 20 years is sold for 6 billion KRW in 2026, under the current system, the deduction is 3.456 billion KRW, resulting in a capital gains tax of 358 million KRW. However, after 2029, the deduction is limited to 1 billion KRW, increasing the capital gains tax to 1.57 billion KRW.
In this structure, people even say, "It is more tax-efficient to live in a place for 2-3 years, sell it when the price rises, and move." It is also possible to criticize it by saying, "The government is effectively encouraging short-term trading." One resident who has lived in Cheongdam-dong, Gangnam-gu, for 40 years lamented, "I didn't do anything; I just lived in the house, but the house price went up."
Setting aside the debate over the validity of the system, what is important to the individual is how to respond. In this structure, the timing of the sale determines the scale of one's assets. The difference between selling in 2027 and 2029 can range from hundreds of millions to over a billion won, and that difference arises from a single piece of information: "the timing of the new deduction limit."
This is why owning the same house can lead to different results.
Loans are a matter of eligibility, not just limits
Many people perceive loans as a question of "how much can I borrow?" However, a more important question in the current market is "am I eligible?"
The growth target for total household loans was raised from 1.5% to 3% in just four months. However, the expanded capacity is prioritized for collective loans and support for young people and low-to-medium credit holders. An official from the banking sector stated, "Even if there is capacity left after executing collective loans and low-to-medium credit loans, it is difficult to increase general mortgage loans."
Starting next January, performance bonuses will not be recognized as regular income. If the income growth rate, including performance bonuses, exceeds 20%, the Debt Service Ratio (DSR) will be calculated based on the average of the last two years; if it exceeds 30%, it will be calculated based on the three-year average. While this measure targets high-earning performance bonuses at large corporations, it actually has a greater impact on workers at small and medium-sized enterprises who have low base salaries and a high proportion of performance bonuses.
In land transaction permit zones, because of the mandatory actual residence requirement, one cannot use 'jeonse' (lump-sum deposit rental), so practically, full cash is required. This is the background behind the 77% drop in land transaction permit applications in the three districts of Gangnam. On the ground, the reaction is, "How many buyers would have 3 billion KRW in cash?"
On the other hand, Samsung Electronics employees can borrow up to 500 million KRW through in-house loans at a 1.5% annual interest rate starting in September. This is in a market where the upper limit of commercial bank mortgage rates has exceeded 7%. As a result, Yeongtong-gu in Suwon recorded the highest growth rate in the country.
In the same market, someone cannot get a loan, while another borrows at 1.5%. If you don't understand this structure, your financial plan itself cannot hold up. In fact, 168 apartment sales contracts were cancelled in Seoul during the month of August alone. In districts like Nowon, Gangseo, Dongdaemun, and Gangdong, there were many cases where funding plans fell apart because loans were not executed as expected.
Paying the down payment before verifying loan conditions is the wrong order.
Redevelopment is a comprehensive test of tax and finance
If you are considering investment in redevelopment or reconstruction, there are things you must verify.
First, the taxes for original members and successor members are different. Original members do not pay acquisition tax on existing land they hold, but only on the completed building. Conversely, successor members pay acquisition tax twice: upon acquiring the membership and upon registration after completion. Dates such as the management and disposal plan authorization date, demolition date, and completion date dictate the calculation of capital gains tax. In redevelopment projects, "when you buy" is just as crucial to the tax burden as "how much you buy for."
Second, the reconstruction excess profit recovery system is being applied in earnest. It targets 46 complexes in Seoul and 18,000 members, with an average contribution of 120 million KRW, ranging from 300 million to 700 million KRW depending on the complex. Recently, transactions with special clauses transferring this contribution to the buyer have appeared, and the government views this as a matter of private contract. If you buy without checking, you may end up bearing a burden of hundreds of millions of won.
Third, you must review the project's viability. Looking at a case in Siheung, Gyeonggi-do, an individual bought an apartment undergoing reconstruction for 265 million KRW six years ago and moved in after investing a total of 565 million KRW, including the additional contribution. However, the current asking price is only 600 million KRW. The profit over six years is 35 million KRW.
Low-priced listings are not necessarily advantageous. If the land share is small, the portion returning to the member is small, which increases the additional contribution. A single-type apartment complex in Sanggye-dong, Nowon-gu, with 31㎡ exclusive units is a prime example. The sale price is in the 600 million KRW range, making it accessible, but if you overlook the fact that the land share per household is small, the burden of the contribution can significantly exceed expectations. Conversely, there are many cases where properties with large land shares are undervalued.
The biggest risk in the rental business is policy change
In 2017, the government actively encouraged the registration of rental housing. One rental business operator who responded to this complied with the 5% upper limit on rent increases for 8 years. The tenant lived there at half the market rate from the time their child was in the 6th grade of elementary school until they became a university student.
Once the mandatory rental period ended, a reduction in tax benefits was announced. The operator's capital gains tax is estimated to increase from 360 million KRW to 780 million KRW. A bigger problem is that the sale itself is difficult. If the tenant exercises the right to request a contract renewal, selling is impossible until 2028, and in land transaction permit zones, it is not easy to sell a house with an existing tenant.
The government's policy is to maintain benefits if the property is sold within the year, but other systems are structured in a way that restricts such sales. Fortunately, recently, the ruling party is reconsidering the reduction of tax benefits for registered rental housing and discussing a plan to maintain the exemption for primary residences for 5 years.
The lesson from this case is clear. The biggest risk in the rental business is not vacancy or interest rates, but policy change. Therefore, you must continuously check in which direction current discussions are heading, the scope of retroactive application, and how transition rules are designed.
How and what should you study?
I would like to suggest three things.
First, organize the dates. Most real estate tax burdens are determined by implementation timing and transition rules. You should organize a table showing what changes and how in 2027, 2028, and 2029. The decision on when to sell starts here.
Second, check your eligibility. You must personally verify with financial institutions before signing a contract regarding income-based DSR limits, whether the area you wish to buy in is regulated, whether you are eligible for policy loans, and how performance bonuses are reflected in your income.
Third, understand the structure, not just individual clauses. You don't need to memorize every single tax law provision. Once a regulation line is set, the segment below it rises; if property taxes are raised, it is passed on as rent; if capital gains taxes are tightened, gifts increase instead of sales. If you understand these operating principles, you can gauge the direction even when new measures are announced.
The situation itself where citizens have to put aside their livelihoods to study tax law is by no means normal. Systems should be simple and predictable, and it is the government's responsibility to design them as such. I want to make this point clear.
However, until such conditions are met, individuals must lead their own lives.
The difference between saving 500 million KRW in taxes and bearing an additional 500 million KRW in costs arises not from the scale of assets, but from differences in information and judgment. The same applies to the difference between someone who can execute a loan and someone who cannot, and the difference between a high-quality redevelopment property and one with an excessive additional contribution burden.
Policies will continue to change. Parliamentary deliberations remain, enforcement decree amendments are pending, and changes due to regime turnover are also expected.
Therefore, do not try to memorize the "correct answers." You must learn how to read them.
No one will return the taxes you paid simply because you didn't know better.