[Edaily KIM EUN KYOUNG Reporter Jang Byeong-ho] Ms. A, a working mother raising two children aged 40 months and 10 months, is planning to move next year. Since she has been leaving her second child with her in-laws since returning to work, she intends to rent out her current home in Yangcheon-gu, Seoul, and move to an area near her in-laws’ home in Gangdong-gu.

However, the August 3 tax reform plan put the brakes on her plans. This is because, even though she is neither selling nor buying a new home, the moment she rents out her home, she becomes a “non-resident single-homeowner,” resulting in a higher tax burden. Ms. A lamented, “I’m not even trying to invest, but because of this sudden tax reform, I have to worry about moving,” adding, “I feel like not only my freedom to move is being restricted, but my career and life plans are as well.”

According to the real estate industry on the 11th, this tax reform is designed to differentiate the tax burden based on whether a single-homeowner actually resides in the property. For the Comprehensive Real Estate Tax, the basic deduction for a single residence used for living will be raised from the current 1.2 billion won to 1.4 billion won based on the publicly assessed value, while the deduction for a non-residential single home will be lowered to 900 million won. The Comprehensive Real Estate Tax credit system is also shifting to prioritize “residence” over long-term “ownership.”

The same applies to capital gains tax. Under the current system, the special deduction for long-term ownership of a single home per household applies 4% per year for the holding period and 4% per year for the residency period, allowing for a maximum deduction of 80%. However, following the reform, this will be replaced by a long-term residency income deduction, which applies 8% per year based on the actual period of residence.

However, the government has established exceptions recognizing up to three years as the residency period for moves due to unavoidable reasons, such as: △ enrollment in high school or college; △ job change or transfer; △ long-term medical treatment or convalescence; △ transfer to another school due to being a victim of school violence; △ residence abroad for the convenience of schooling or work; and △ living with and caring for a direct ascendant aged 60 or older.

The problem is that not all the various residential moves that occur in real life are covered by these exception clauses. In particular, child-rearing is not explicitly listed as a separate exception. It is currently unclear whether a case where a dual-income couple moves closer to a parent who can help care for an infant or toddler will be recognized as “other similar unavoidable reasons.”

Even if a situation qualifies as an exception, additional requirements must be met. The individual must have continuously resided in the current home for at least one year as of the date of relocation, and the move must be to “another city or county.” While Mr. A meets the one-year residency requirement, his move from Yangcheon-gu to Gangdong-gu—both within Seoul—means he would likely be ineligible for this exception under the current reform proposal.

Consequently, critics point out that even single-homeowners who rent out their primary residence and live in another home on a monthly rent or jeonse basis—due to life-cycle changes such as work or child-rearing, and regardless of speculation—could be lumped together under the single criterion of “non-residence.” This raises concerns that, regardless of the policy’s intent to protect actual residents, the tax measures could have the unintended consequence of restricting even normal residential relocations.

There are also concerns that if non-resident single-homeowners switch to actual residency to avoid the tax burden, existing tenants could be pushed back into the monthly rent and jeonse market, thereby stimulating demand for rental housing. These concerns were raised during the plenary session of the National Assembly’s Land, Infrastructure, and Transport Committee held that day. In particular, even within the government and the ruling party, there were pointed out that strengthening taxation on non-resident single-homeowners could cause an unexpected shock to the rental market.

Rep. Kang Deuk-gu of the Democratic Party of Korea stated, “If we regulate single-home owners who do not reside in their properties, the owners will have to either live in the home or sell it,” adding, “In either case, existing tenants on jeonse or monthly rent contracts will be forced to vacate the property.” He continued, “If existing tenants re-enter the market, demand for jeonse and monthly rent will inevitably increase, and prices will rise as well,” calling for a detailed response to the potential rise in jeonse prices.

The opposition party highlighted the conflict between the tax system and existing real estate regulations. Kim Jeong-jae, a lawmaker from the People Power Party, criticized the government for encouraging owners of a single non-residential home and multi-homeowners to put their properties on the market while simultaneously restricting buyer access through measures such as the land transaction permit system and the mandatory residency requirement. The government plans to review whether to amend the tax reform proposal in light of these concerns.

Experts emphasize that the criteria must be carefully crafted to ensure that even those who are unavoidably unable to live in their homes are not penalized. Kim In-man, director of the Kim In-man Real Estate and Economic Research Institute, said, “If we are to raise both property taxes and transaction taxes on non-residential homes, this must be backed by a clear explanation of why such taxation is necessary,” adding, “The reasons for being unavoidably unable to live in one’s own home also need to be carefully designed to reflect actual living circumstances.”