In-Depth Analysis of the August 2026 Comprehensive Real Estate Policy and Tax Reform

Background of the August Comprehensive Real Estate Policy Announcement

The government is set to announce a new comprehensive real estate policy and tax reform package in early August 2026, aiming to normalize housing transactions and stabilize the market. Following the recent 'National Real Estate Policy Debate' presided over by the President and Prime Minister, measures to improve tax equity and protect actual demanders have entered the final coordination stage. In particular, as the housing price prospect index for Seoul and the metropolitan area recently hit a 3-year and 10-month high, the need for preemptive market stabilization measures has emerged.

Key Directions for Tax Reform

Restructuring Comprehensive Real Estate Tax and Holding Taxes

The core of the holding tax reform lies in shifting the tax base and easing the burden on end-users. The main points currently under discussion are as follows:

• Shift in Tax Base: A transition from the existing 'number of homes' based taxation to a 'property value' based system is being pursued. This aims to resolve the irrational tax burden discrepancy between owners of multiple low-cost homes and a single high-cost home.
• Increase in Basic Deduction for End-users: To prevent single-home end-users from bearing excessive comprehensive real estate taxes due to natural housing price inflation, an upward adjustment of the current 1.2 billion KRW basic deduction limit is strongly being considered.
• Strengthened Taxation on Ultra-high-net-worth Homes: To ensure tax equity, the tax burden on owners of ultra-high-priced homes is likely to be maintained or strengthened.

Capital Gains Tax and Deregulation for Multiple-home Owners

Reforming the capital gains tax to resolve the accumulated lock-in effect of market listings is another major pillar of this policy.

• Setting Limits on Special Deduction for Long-term Holding: To restrict excessive tax benefits concentrated on ultra-high-priced homes, discussions are underway to set a limit (around the 1 billion KRW mark) on the special deduction for long-term holding.

Supply Expansion and Financial Support Policies

Along with tax reform, supply and financial policies for practical housing stability will run in parallel. The government is carefully reviewing support for the new construction of non-apartment housing (villas, officetels, etc.) to expand short-term supply, alongside limited lifting of greenbelt restrictions within the metropolitan area.

On the financial front, targeted support for vulnerable groups is emphasized. While maintaining customized loan support for youth and newlyweds, measures to reduce actual housing costs, such as expanding the monthly rent tax credit limit, will be included to prevent sharp fluctuations in the jeonse and monthly rent market. However, for additional loans to existing homeowners, the government plans to strengthen screening by upgrading the home ownership verification system to control the growth rate of household debt.

Market Outlook and Policy Impact

The government clearly states that the purpose of the upcoming August real estate policy is not simply punitive taxation but market stabilization through the normalization of transactions. Currently, a deep wait-and-see attitude has formed in the real estate market, particularly in high-priced housing areas, ahead of the specific tax reform announcement.

Once the tax reform is confirmed, the trajectory of housing prices in the second half of the year will depend on how many properties from multiple-home owners are released into the market. If the property value-based tax system takes root, transactions in the mid-to-low-priced housing market may revitalize, but the ultra-high-priced housing market may face a short-term transaction cliff as the calculations become more complex.