The government is reportedly planning to include measures to strengthen real estate-related taxes, such as capital gains tax and comprehensive real estate holding tax, in its tax code revision package to be announced early next month.

As housing prices in Seoul continue to rise despite loan regulations, the government is stepping in to stabilize the housing market through the tax system. Consequently, the tax burden is expected to increase not only for multi-home owners but also for single-home owners with high-priced properties.

First, the government is pushing to revise the long-term holding special deduction, which lowers the capital gains tax burden for single-home owners.

This special deduction is a system that subtracts a certain amount from the capital gains generated when selling a house, the longer the owner has held or lived in it.

Currently, a household with a single home can receive deductions of up to 40% each for the holding period and the residency period, for a total deduction of up to 80%.

The government is reviewing a plan to abolish the deduction based on the holding period and recognize only the deduction based on the actual residency period.

A plan to cap the residency period deduction—which currently has no separate monetary limit—at around 1 billion won is also being pursued.

If implemented, this could significantly increase the tax burden for single-home owners who have held their homes for a long time without actually living in them, or those holding high-priced properties with large capital gains.

This move by the government to target even single-home owners in its tax reform is interpreted as a conclusion that the recent preference for so-called "smart single homes," spreading mainly around Seoul, has been a driving factor behind rising home prices.

The comprehensive real estate holding tax is also expected to be tightened.

Instead of raising the comprehensive real estate tax rate itself, the government is considering raising the fair market value ratio—currently set at 60%—higher for more expensive homes.

When the fair market value ratio rises, even owners of homes of the same value face a larger tax base applied when calculating the comprehensive real estate tax, leading to higher taxes owed.

Moving away from the current system that applies different tax rates by distinguishing between single-home owners and multi-home owners, a plan to determine the tax burden centered on the aggregate value of owned properties is also being discussed.

However, some point out that strengthening holding taxes and capital gains taxes simultaneously could send mixed signals to the market.

While raising holding taxes has the effect of inducing owners to sell their homes, raising capital gains taxes at the same time could prompt homeowners to withhold properties from the market or choose gifts instead of sales.

Concerns are also being raised that the tax burden could increase even for long-term single-home owners who could not actually reside in their homes due to job relocation or childcare, or elderly individuals who have lived in one home for a long time.

(Reported by Kim Min-jeong | Video by Lee Eui-sun | Graphics by Yook Do-hyun | Produced by SBS Digital News)