Opposition slams real estate tax reform as 'double-standard design' burdening specific groups

The opposition People Power Party has criticized the government's real estate tax reform plan as a "double-standard design that claims to protect owner-occupants while increasing the burden on specific groups." Experts at the forum also urged a full review from scratch, saying the reform leaves income tax — the backbone of the national tax system — untouched.

PPP lawmaker Seo Myeong-ok said at the "Emergency Diagnostic Forum on the Real Estate Tax Reform Plan," held Friday at the National Assembly Members' Office Building, that the proposal "raised both the tax rate and the tax burden cap together, while actually reducing deductions for single-homeowners who do not live in their property."

The forum was co-hosted by Seo and five other PPP lawmakers — Kwon Young-se, Na Kyung-won, Jo Eun-hee, Shin Dong-wook and Park Su-min. Seo also said the capital gains tax relief system for elderly homeowners was far removed from reality. "The eligibility requirement that assumes relocation out of the Greater Seoul area shows no consideration for how elderly people actually live — it is desk-bound policymaking," she said. "Telling someone to leave behind the neighborhood they have lived in their whole life, the hospital they have always used, and the family they love is not a benefit. It is coercion and a burden."

Na Kyung-won denounced the reform as "national plunder and tax deterioration." She said the plan "brands elderly citizens who spent a lifetime diligently buying a single home as speculators, and seeks to retroactively strip away their long-term holding deduction benefits." She called it "retroactive taxation" and "serious state violence that tramples on the freedom of residence and movement and the right to private property guaranteed by the Constitution."

Na also raised the issue of the heavier capital gains tax imposed on registered rental housing providers. She said it was "contradictory to impose a heavier capital gains tax on the grounds that a grace period has expired, when the rental period was forcibly extended by a tenant exercising their right to request contract renewal under the Housing Lease Protection Act — a situation in which the landlord is legally unable to sell." She urged that "the tax grace period be guaranteed through the expiry date of the forcibly extended lease contract, in order to protect taxpayers."

Experts attending the forum also said the reform lacked sufficient public consensus and called for a review from the ground up. Kim Woo-chul, chairman of the Korea Public Finance Association, said the proposal was "in substance a tax law revision centered on the real estate tax system."

Kim noted that of the net tax revenue increase of 2.34 trillion won ($1.69 billion), the comprehensive real estate holding tax accounted for 2.18 trillion won, or 93.1 percent. "The scale of the tax increase is not small," he said. "The problem is that nearly all of it comes from a single tax item covering 480,000 taxpayers, while income tax and other pillars of the national tax system are left unchanged."

He added that "the legitimacy of taxation cannot rest on majority vote alone — it requires broad consensus and procedural justification," and that "replacing a standard that has been in place for 20 years since 2005 must be preceded by adequate persuasion."

Kim also said that "even by the government's own projections, selling the same rental property in 2027 would require paying 90 million won, in 2028 it would be 170 million won, and in 2029 it would be 320 million won," adding that "the gaps between the stages distort the timing of transactions."

Lee Chang-moo, a professor in the urban engineering department at Hanyang University, said the housing market had deteriorated within just one year of the Lee Jae-myung administration to resemble conditions seen at the end of the previous progressive government's term. He said tightened regulations on owning a single high-value property had "triggered price rises beyond the Han River belt to outer Seoul neighborhoods including Nowon, Dobong and Gangbuk, as well as Geumcheon, Gwanak and Guro."

Lee urged a full review of the tax reform plan from scratch. "Major cities in metropolitan areas inevitably have a high proportion of young and middle-aged renter households who lack assets but seek access to employment," he said. "The ones supplying rental housing to these households are multi-homeowners."

He went on to say that "the ultimate solution is to recognize multi-homeowners, including single-homeowners who do not live in their property, as legitimate private rental housing suppliers."