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South Korea tax reforms and housing supply efforts

Updated 27 times since CLSTR started tracking revisions of this situation.

What changed

2026-09-03 03:35 UTC → 2026-09-06 08:05 UTC · added ~~removed~~

South Korea ~~adjusts~~ tax reforms ~~amid LH debt concerns~~ and housing supply efforts

The 2026 real-estate tax reform in South Korea continues to face political and public backlash. While the administration aims to shift taxation toward residency-based benefits, residents in areas like Seocho-gu have expressed fears of being “unfairly penalized” due to rising property values. To mitigate market shock, the government is reconsidering its plan to reduce the comprehensive real estate tax basic deduction from 1.2 billion won to 900 million won. Instead, officials are considering maintaining the 1.2 billion won threshold while potentially increasing the deduction for actual residents to 1.4 billion won. President Lee Jae-myung has defended these adjustments, rejecting claims that the changes represent a retreat from reform. He emphasized that maintaining the 1.2 billion won deduction for non-resident single-home owners while increasing the resident deduction to 1.4 billion won reflects public and political feedback, specifically targeting multi-home owners and high-value properties. To address housing shortages, the government has announced an expanded supply plan targeting the metropolitan area to provide over 230,000 additional units. However, the financial stability of the Korea Land and Housing Corporation (LH) has come under scrutiny. Debt incurred per unit of integrated public rental housing rose to 288 million won last year, a 60.9% increase from 2021, driven by rising construction costs. With plans to expand public rental housing to 172,000 units next year, LH’s debt ratio is projected to reach approximately 262% by 2028, raising concerns regarding the sustainability of the national housing supply strategy. To further stabilize the market, the Korea Housing Finance Corporation (HF) will increase the guarantee ratio for real estate project financing (PF) to 100% through the end of 2027. In an effort to accelerate these supply goals, Gyeonggi Province has proposed 13 institutional reforms to the central government.

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