Expiration of Multiple Homeowner Capital Gains Tax Deferral: Structural Analysis of Transaction Stagnation Driven by 82.5% Maximum Tax Rate

End of Capital Gains Tax Deferral for Multiple Homeowners and Tax Policy Shifts

The temporary exclusion of the capital gains tax surcharge for multiple homeowners, which took effect in May 2022 and was extended annually, officially ended on May 9, 2026. As the four-year trend of tax relief concludes, multiple homeowners in regulated areas are forced to completely revise their property selling strategies. The expiration of this measure goes beyond a simple increase in tax burden; it serves as a core factor causing supply-demand imbalances and transaction contraction in the housing market.

The Revival of Surtaxes and an 82.5% Maximum Effective Tax Rate

Starting with transfers on May 10, 2026, the capital gains tax surcharge system applies again to multiple homeowners in regulated areas. For owners of two homes, 20 percentage points are added to the base rate (6-45%), while owners of three or more homes face an additional 30 percentage points. With the inclusion of a 10% local income tax, the maximum effective tax rate for those owning three or more properties reaches up to 82.5%. A structural environment has been created where the vast majority of capital gains are recouped through taxation.

Exclusion of Long-Term Holding Special Deductions and Loss of Selling Incentives

Alongside the tax rate hike, the exclusion of the special deduction for long-term holding poses a significant impact. During the deferral period, sellers could receive a deduction of up to 30%. However, with the revival of the surcharge system, multiple homeowners in regulated areas can no longer receive tax benefits based on their holding period. This severely degrades the incentive for long-term owners to sell their properties.

Short-Term Shocks to the Transaction Market and Wait-and-See Sentiments

The end of the capital gains tax deferral is immediately reflected in market indicators. As of June, apartment transaction volumes have shown a distinct, sharp decline compared to the previous month, with both buyers and sellers entering a deep wait-and-see phase.

Intensifying Lock-in Effect

The most prominent phenomenon is the 'lock-in effect.' Multiple homeowners who failed to complete their sales before May 9 are opting to hold their properties until market conditions change, choosing to bear property and comprehensive real estate holding taxes rather than absorb the massive capital gains tax burden. This leads to an absolute decrease in properties supplied to the market.

Stalemate Between Buyers and Sellers

The few sellers remaining in the market are attempting to pass the increased capital gains tax burden onto the selling price. Conversely, buyers are refraining from chasing higher prices, citing the high-interest-rate environment and macroeconomic uncertainties. As the gap between asking prices and actual transaction prices widens, a deadlock has formed where executing a trade becomes inherently difficult.

Forecast for Structural Polarization in the Real Estate Market in the Second Half

The current transaction stagnation is highly likely to catalyze structural polarization in the market rather than remaining a short-term phenomenon.

Preference for 'One Solid Asset' and Portfolio Reorganization

As tax burdens increase exponentially in proportion to the number of homes owned, investors are reorganizing their asset portfolios. The preference for holding a single, high-quality property in a prime location—achieved by disposing of multiple properties in peripheral areas—is expected to become more pronounced. This acts as a factor that further widens the price gap between prime locations in Seoul and regional cities.

Conclusion: Policy Uncertainty and Market Response

The expiration of the multiple homeowner capital gains tax deferral in 2026 is a decisive variable contracting the real estate transaction market. The transaction cliff resulting from the lock-in effect is likely to persist for the time being, and the market distortions triggered by tax changes could place a long-term burden on the housing supply-demand balance. Both investors and actual demanders should closely monitor macroeconomic indicators and shifts in tax policy while adopting conservative asset management strategies.