Koo Yun-cheol, Deputy Prime Minister and Minister of Economy and Finance, appeared on KBS News9 to explain the purpose and key details of the 2026 tax reform plan.
During the broadcast on August 3, Koo stated that the reform aims to support economic growth by introducing a new domestic production tax credit this year, which includes aspects related to national strategic technologies such as small modular reactors (SMR). He added that the comprehensive tax reform plan also encompasses real estate tax reform, rationalization of tax expenditures, and adjustments to the family business inheritance deduction to ensure fair tax equity.
Regarding the real estate tax reform, Koo emphasized that the most significant expected benefit is highlighting the residential aspect of housing as a place for people to live.
To stimulate the stagnant transaction market, Koo proposed incentives such as capital gains tax benefits for homes sold after more than ten years of residence. He also mentioned that rental property owners would receive benefits if they sell their properties within a certain period after the rental period ends, aiming to increase the availability of housing on the market.
On the threshold for increased tax burdens set at 4 billion won, Koo noted that homes valued at over 4 billion won account for only 0.4% of the total. He stated that the plan aims to normalize taxation starting from the 4 billion to 5 billion won range.
In response to concerns from high-value property owners and single-home owners, Koo clarified that properties valued under 3 billion won would see tax reductions, and those under 2 billion won would be completely exempt from the comprehensive real estate tax. He explained that adjustments for properties up to 4 billion won, which represent only 1.1% of all homes, are minimal, while the normalization for properties over 4 billion won (0.4%) addresses the previously low tax burden compared to past home price increases.
Addressing criticisms that tax regulations could worsen the rental market and harm genuine buyers, Koo assured that measures are being developed to alleviate difficulties for non-homeowners, young people, and newlyweds, including promoting housing supply and providing financial support.
When asked about concerns over supply shortages, Koo stated that the government is working to maximize housing supply by reviewing the release of some greenbelt areas, as well as utilizing locations near subway lines and state-owned military facilities. He emphasized that a report to the public would be forthcoming.
Meanwhile, in response to criticisms regarding the extension of the capital gains tax exemption for multiple homeowners, Koo explained that the government considered the opinions and realistic conditions of multiple homeowners while implementing a grace period in the context of raising taxes. He requested understanding that the adjustments reflect the voices of the citizens incorporated into the tax reform plan.
* This article has been translated by AI.
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