Lee Criticizes Opponents of Long-Term Holding Deduction Repeal, Calling Claims “Blatant Disinformation”

President Lee Jae-myung sharply criticized opponents of his administration’s plan to abolish the long-term holding special deduction on capital gains tax, dismissing warnings of a potential “tax bomb” as “logical contradiction and blatant disinformation.”

In a statement posted on X (formerly Twitter) Tuesday, Lee defended the proposal that has become a flashpoint between the ruling party and opposition. “People should not be deceived with lies aimed at rationalizing flawed self-serving arguments that conceal improper motives,” the president wrote.

The controversial measure would eliminate tax breaks currently offered to property owners based solely on how long they’ve held their properties, regardless of whether they live in them. Lee emphasized that a separate tax reduction system already exists specifically for long-term residents, distinguishing between those who purchase homes to live in versus investment purposes.

“When someone buys a house not to live in but to make money, and the value rises, capital gains tax is naturally owed on that profit,” Lee stated. “Why should it be slashed just because they held it for a long time?”

The president suggested the revenue saved from eliminating these deductions could instead benefit working South Koreans through earned income tax reductions. “Unless someone is defending real estate speculation, there is no reason to argue for cutting capital gains tax based on length of ownership,” he added.

Opposition parties have vigorously fought against the ruling bloc’s bill, warning it could freeze the real estate market by discouraging property sales. Lee directly addressed these concerns, proposing a gradual implementation strategy to prevent market disruption.

“If the deduction is abolished but implementation is suspended for six months, halved for the next six months, and fully abolished after one year, those who sell earlier would benefit,” he explained. “This would induce supply rather than lock it in.”

The tax policy debate occurs against the backdrop of South Korea’s notoriously expensive housing market, where real estate has long been viewed as the primary vehicle for wealth creation. Housing affordability has become a pressing political issue, with younger generations facing significant barriers to homeownership in major urban centers.

Lee also suggested codifying the repeal in a way that would prevent future administrations from reversing course, arguing this would eliminate any incentive for property holders to wait out his term. “If the law explicitly prohibits the revival of the long-term holding deduction, even a change of administration would not allow the president to alter it arbitrarily,” he noted.

The president’s comments reflect his administration’s broader economic policy approach, which has emphasized reducing wealth inequality and addressing speculative investment in the housing market. His government has implemented various measures aimed at cooling property prices and improving affordability, though these efforts have met with mixed results.

Real estate industry analysts remain divided on the potential impact of eliminating the deduction. Some support the president’s assessment that a phased approach would minimize market disruption, while others warn that any reduction in tax benefits could further dampen transaction volumes in an already sluggish market.

Lee concluded his statement with a direct challenge to property investors, suggesting the changing economic landscape makes real estate speculation increasingly risky. “Until now, real estate has been almost the only means of asset accumulation, but now excellent alternatives are emerging,” he said. “The decision is yours, but you will need to carefully calculate the economic gains and losses.”

The bill’s fate remains uncertain as it faces continued opposition in the National Assembly, where the ruling party lacks a comfortable majority to pass contentious legislation without compromise.