Government Targets High-Value Non-Owner-Occupied Homes in New Tax Overhaul Plan

South Korea’s government unveiled a property-tax overhaul Monday that will reduce deductions for expensive homes not occupied by their owners and shift more of the tax burden onto multiple-home owners. The changes are scheduled to begin January 1, 2027.

The Ministry of Economy and Finance said the package will redirect tax benefits toward genuine owner-occupiers. It forms part of President Lee Jae Myung’s effort to normalize the housing market, stabilize prices and support genuine homebuyers.

The plan gives a larger basic deduction to a single-home owner who lives in the property. That deduction will rise from 1.2 billion won to 1.4 billion won in assessed value.

The break shrinks for an absentee owner. A single-home owner who does not live in the property will see the basic deduction fall from 1.2 billion won to 900 million won.

Finance Minister Koo Yun-cheol defended the shift at a briefing at the Government Complex Sejong.

“A home should be a place to live rather than merely an asset to buy. This year’s tax reform focuses on supporting sustainable economic growth and livelihood stability through the tax system.”

Lee chaired a national debate on real estate policy on July 23 before the government finalized the package. Han Seong-sook, the prime minister, also attended high-level meetings that coordinated the measures.

The tax base will depend more on property value

The comprehensive real estate holding tax will move away from a system centered mainly on the number of homes owned. The revised approach will place greater weight on the combined value of a person’s properties, directing more pressure toward high-value homes and other expensive holdings.

Multiple-home owners will receive a 400 million won basic deduction. They may qualify for up to an additional 500 million won, depending on the assessed value of the home they occupy compared with the value of their total portfolio.

The government will also raise the fair market value ratio used for residential property under the comprehensive real estate tax. The ratio will increase from 60 percent to 70 percent in 2027, then to 80 percent from 2028, for owners of three or more homes and owners of homes in regulated areas. Single-home owners are excluded from that increase.

The ministry described the package as a bid to promote greater fairness based on ownership and residency status. Lee has argued that property taxes should rise sharply over time, while protecting ordinary single-home owners and people temporarily away from home for work, education or medical reasons.

Capital-gains deductions will favor actual residence

The reform also changes the long-term holding deduction for capital gains tax. The government plans to tie the benefit more closely to actual residence instead of giving equal weight to the length of ownership.

Under the existing system, long-term holders can receive a combined 80% deduction, made up of 40% for ownership and 40% for residence. The proposed structure replaces that arrangement with a residency-only credit of 8% per year, capped at 80% after 10 years.

A separate monetary ceiling will limit the deduction. The cap will be 2 billion won ($1.4 million) in 2028, then fall to 1 billion won ($715,000) from 2029.

The change could sharply increase capital-gains tax for owners of ultra-luxury properties. Estimates cited in the reform discussion indicate that residents of high-end districts, including Gangnam, could face a potential fourfold increase for homes worth 5 billion won or more because of the new 1-billion-won cap.

The Seoul luxury market already contains a large pool of properties within the plan’s focus. Estimates put the number of units with a market value above 3 billion won at approximately 166,000, with 91% concentrated in Gangnam.

Tenants receive a larger rent credit as landlords face higher costs

The package also raises the annual cap on the monthly rent tax credit for tenants. The limit will increase from 10 million won to 12 million won.

Opposition lawmakers and market experts have warned that landlords may respond to higher holding taxes by passing the costs to tenants. They linked that risk to possible pressure on both jeonse, a lump-sum deposit system, and monthly rental supply.

The People Power Party called the proposal the “worst tax reform in history.” Floor Leader Jeong Jeom-sig described it as a “two-faced overhaul” that “effectively suppresses the freedom of relocation.”

Real estate researcher Kim In-man, head of the Kim In-man Real Estate Economic Research Institute, said the measures could limit price spikes in the ultra-luxury segment. He also warned that demand could shift toward mid-range homes priced below 2 billion won, pushing those prices higher.

The National Assembly will consider the package later this year

The government expects to submit the 2026 Tax Overhaul to the National Assembly by the end of 2026. The main property-tax changes are scheduled to start in 2027, while the capital-gains deduction caps will phase in during 2028 and 2029.

Lee addressed the broader rationale in July, saying the current system has too many deductions and exemptions to perform taxation’s basic function. He also said there was general agreement on increasing the burden for ultra-high-priced homes, including some primary residences.

Recent Realmeter polling conducted from July 20–23, 2026, put Lee’s approval rating at 46.3%. The polling took place amid public anxiety over the planned tax increases.

The reform therefore sets different treatment for residents and investors before the National Assembly votes. Its first scheduled implementation date is January 1, 2027.

This article is for informational purposes only and does not constitute tax advice. Consult a qualified tax professional or CPA about your specific situation.