Say you bought an 84-square-meter apartment at Raemian Firstige in Seoul's Banpo neighborhood 10 years ago for 1.6 billion won ($1.19 million), lived in it, and now sell it for 5.6 billion won ($4.16 million). Sell this year, and the capital gains tax (a tax on the profit from a sale) is 241.85 million won (about $180,000). Sell for the same profit in 2029, and it becomes 944.85 million won (about $702,000). Those are the numbers Woo Byung-tak, a tax expert at Shinhan Premier Pathfinder, calculated under the government's tax reform plan.
Listings rose first in Gangnam. As of Oct. 5, apartment listings in Seoul's three Gangnam districts (Gangnam, Seocho and Songpa) stood at 26,829, up 64.1% from the end of last year. Gangnam apartment prices have also fallen, and some see this as a sign that Gangnam is heading down.
But the key is elsewhere. Listings only count people who want to sell; prices are set by who takes those homes. And this tax has not yet passed the National Assembly.
- Why would the tax on the same home nearly quadruple?
Today, if you own and live in one home for a long time, part of that profit is left out of the tax calculation (the long-term holding deduction). It deducts 4% a year each for owning and living there, up to 80% after 10 years, with no cap on the amount.
The reform plan the government released on Aug. 3 adds a cap. After a one-year grace period, it will deduct at most 2 billion won ($1.49 million) in 2028 and 1 billion won ($743,000) from 2029. From 2029, only years actually lived in the home count, at 8% a year, up to 80%.
Think of it like a store coupon. A coupon that said "80% off, no limit" gets "up to 1 billion won" added from 2029. Unlike a coupon, though, what gets cut is not the price but the profit that will be taxed. So for the Banpo home, with a profit of 4 billion won ($2.97 million), the tax rises from 241.85 million won to 449.85 million won ($334,000) in 2028 and 944.85 million won in 2029.
Put simply, the more a pricey home has gained, the more its tax rises, while cheaper homes see smaller increases. Sell an 84-square-meter unit at Tenzhill in Wangsimni, Seongdong District, bought for 750 million won, for 2.1 billion won, and the tax goes from 8.17 million won ($6,000) to 16.78 million won ($12,500) in 2028, with no further rise in 2029.
- Why are Gangnam owners listing now?
According to Asil, a listing-tracking firm, listings in the three Gangnam districts went from 16,346 at the end of last year to 26,829 on Oct. 5. Songpa was up 86.0%, Gangnam 59.0% and Seocho 57.8%, and the total is 20.9% higher than on Aug. 3, the day the plan was announced.
Yoon Su-min, chief real estate expert at NH NongHyup Bank, guessed that listings are coming out because "Gangnam has a high share of elderly long-term owners, and they have judged that they should avoid capital gains tax in the hundreds of millions of won first." It is like the checkout line getting longer before a sale ends. Here, though, it is the sellers' line.
- Who is taking all these listings now?
Few deals are happening yet. In August, new applications for land transaction permits (a rule requiring city approval before buying a home) for Seoul apartments numbered 3,012. That was the lowest monthly figure since the rule was extended to all of Seoul last October, as uncertainty over the tax reform combined with interest rates and loan limits.
The slowdown in deals has led to weaker prices. According to the Korea Real Estate Board, Gangnam District apartment prices fell 0.56% in the fourth week of September, the biggest drop since the fourth week of January 2019.
The rise in listings is now spreading beyond Gangnam. Of the 2,285 listings added in Seoul over the past week, 93.3% came from outside the three Gangnam districts.
- Who does a brokerage see as the next buyers?
The industry sees 3.5 billion won ($2.6 million) as the line where the holding tax (the tax paid every year while owning a home) starts rising sharply. In an Oct. 2 report, NH Investment & Securities forecast that buying demand in Gangnam would gather around that price. It estimates the holding tax on a 4-billion-won home will rise from 11.54 million won ($8,600) to 12.96 million won ($9,600).
The buyers fall into two groups. One is retirees short on cash, who would sell a big home and move into an apartment with 59 to 84 square meters of actual living space in Gangnam District or a new apartment in Songpa.
The other is people in their 30s and 40s. Lee Eun-sang, an analyst at NH Investment & Securities, said that selling a 2.5-to-2.8-billion-won ($1.9 million to $2.1 million) apartment in Mapo or similar areas leaves 2.4 to 2.7 billion won ($1.8 million to $2.0 million) after taxes and costs, and that "adding about 1 billion won ($743,000) to that lets you move to a near-new apartment in Gangnam worth 3.5 to 4 billion won ($2.6 million to $3 million), or a new one in Gaepo." It is like trading in a used car for a new one: if your car keeps its value while the car you want gets cheaper, you need to add less money. This trend, however, has not yet shown up in actual deals.
- What changes if the National Assembly changes the plan?
At a Sept. 1 Cabinet meeting, the government backed off its original plan to cut the basic deduction on the comprehensive real estate tax (a holding tax on pricey homes) for one-home owners who don't live in their home to 900 million won ($669,000), keeping it at 1.2 billion won ($892,000). The deduction cap also faces pushback and could change during the Assembly's review.
Rushed sales ahead of a tax deadline already happened this year. In late August, some large Apgujeong Hyundai apartments were listed at asking prices (the price an owner asks) 2 to 3 billion won ($1.5 million to $2.2 million) below their previous highs, and one broker said some prices were even lower than the rushed sales ahead of the heavier capital gains tax on multi-home owners (people who own more than one home) that took effect in May. The difference this time is that the reform targets one-home owners who have lived in a home for a long time, and that the deadline has not yet been set into law.
- BITPRESS Insight
Reading the 64.1% jump in listings only as a sign of a Gangnam crash misses half the picture. This tax deadline exists only for sellers. Before a deadline, sellers are in a hurry, and buyers have plenty of homes to choose from.
That is where money decisions split. In the Banpo example, selling this year versus in 2029 means a tax difference of about 700 million won ($520,000). For people in their 30s and 40s who want to move to Gangnam, listings are piling up to choose from. But if the National Assembly changes the cap, the deadline changes too.
One test: when you see news that listings are up, first ask, "Do sellers face a deadline, and is that deadline set in law?"
Sources
https://www.fnnews.com/news/202608041408061716
https://v.daum.net/v/20261006111158417
https://www.newspim.com/news/view/20261002000838
https://www.newspim.com/news/view/20260831000739
https://biz.sbs.co.kr/amp/article/20000332464
Glossary
Capital gains tax — A tax on the profit from selling an asset such as a home.
Long-term holding deduction — A rule that leaves a set share of the profit out of the tax calculation the longer you own and live in a home.
Property holding tax — The property tax and comprehensive real estate tax you pay every year while owning a home.
LandTransactionPermit — A rule that requires city approval before buying a home or land in designated areas.
Listing — A home an owner has put up for sale.
BITPRESS articles are information to help your investment decisions, not a recommendation to buy or sell any stock or coin. Investment decisions and their results are your own responsibility.
