President Lee Jae-myung on Tuesday rebutted claims that abolishing the long-term holding special deduction on capital gains tax for single-home owners would impose a "tax bomb" on actual residents, calling such arguments "a logical contradiction and blatant disinformation." Regarding concerns that the repeal could cause a housing supply lock-in, Lee said the issue "can be resolved by phasing out the deduction gradually and in stages, giving owners time to sell."
Lee made the remarks on X, formerly Twitter, on Tuesday, saying, "People should not be deceived with lies aimed at rationalizing flawed self-serving arguments that conceal improper motives." Sharing an article reporting that opposition parties were strongly resisting a bill recently proposed by the ruling bloc to repeal the long-term holding deduction, Lee pointed out that "the capital gains tax long-term holding deduction is a system that drastically reduces capital gains tax solely on the grounds of long-term ownership, regardless of whether the owner actually resides in the home." He added that "a separate system already exists to reduce capital gains tax for long-term residence."
"When someone buys a house not to live in but to make money, and the value rises, capital gains tax is naturally owed on that profit. Why should it be slashed just because they held it for a long time?" Lee said. "Unless someone is defending real estate speculation, there is no reason to argue for cutting capital gains tax based on length of ownership." He added, "It would be better to use that money to cut earned income tax for people who have worked long hours."
Addressing concerns that the repeal could trigger a housing supply lock-in, Lee countered, "For example, if the deduction is abolished but implementation is suspended for six months, halved for the next six months, and fully abolished after one year, those who sell earlier would benefit. This would induce supply rather than lock it in." He added, "If the law explicitly prohibits the revival of the long-term holding deduction, even a change of administration would not allow the president to alter it arbitrarily, making it pointless to hold out."
"Excluding legitimately owned properties such as a single home for actual residence or a single home temporarily unoccupied due to work, if the burden of holding investment or speculative real estate is strengthened to the level of advanced countries, holding out will only lead to losses," Lee said. "Loans for real estate speculation should be completely blocked, existing loans strictly recovered, and once the holding burden is normalized, the currently excessively high real estate prices can be normalized."
He continued, "Until now, real estate has been almost the only means of asset accumulation, but now excellent alternatives are emerging. Are you going to hold out to the end bearing these risks and burdens? The decision is yours, but you will need to carefully calculate the economic gains and losses."
