SEOUL, Aug 3 - South Korea's finance ministry unveiled a package of tax-code revisions on Monday designed to increase the tax burden on wealthier property owners as policymakers seek to temper a hot housing market.
The announcement followed a closed-door meeting called by President Lee Jae Myung in which both the domestic stock and property markets were discussed. Government officials said the moves are intended to reduce public discontent linked to rapid house price gains and swings in the equity market.
Finance Minister Koo Yun-cheol framed the reforms as an effort to prioritise housing as a place to live rather than an asset to be traded. "We will reform real estate taxes in a reasonable manner to establish a residence-oriented housing market under the principle that a home is a place for living, not buying," he said.
Among the proposals set out in the annual tax code revision, the ministry indicated it would broaden exemptions for taxpayers who own one house and reside in it, while narrowing exemptions for other owners. It also proposed lifting real estate holding tax rates by as much as 2.3 percentage points, with the precise increase tied to house price bands.
The changes are meant to raise the tax burden on households holding multiple properties and on owners of more expensive homes. On the treatment of single-home households, Koo provided a granular outline: "For households that own one house, tax burden will decrease if their house is under 3 billion won ($2.1 million). From 3 billion won to 4 billion won, it will be raised in slices, and it will be more normalised for those between 4 billion to 5 billion," Koo said.
The government has been intensifying public outreach on housing policy. Last month the administration held a series of public discussion forums after house prices rose for a 13th consecutive month in June, registering the largest increase since November 2021.
Public sentiment toward the president has shown signs of strain. Approval ratings for President Lee dropped to a one-month low of 51% in a Gallup Korea survey published on July 24, with housing market policy cited as the leading cause of negative views for the first time since he assumed office in June 2025.
Monetary authorities have also signalled concern about the economic backdrop. The Bank of Korea, noting that record earnings in the chip industry are feeding into higher inflation and residential property prices, raised interest rates last month for the first time in three-and-a-half years and indicated further increases may be forthcoming.
Beyond property levies, the finance ministry proposed tax exemptions aimed at encouraging domestic production for domestic sales in several strategic sectors, including solar energy, wind energy, rechargeable batteries, semiconductors, key materials and AI robots.
The ministry intends to formally submit the tax code proposal to parliament by Sept 3. ($1 = 1,429.4000 won)