To Avoid the 'Comprehensive Real Estate Tax Bomb' for Multi-Homeowners... Must Sell by 'End of May Next Year'

[Asia Economy Reporter Jang Hyowon] The comprehensive real estate tax burden for multi-homeowners or owners of high-priced single homes is expected to increase starting next year. To avoid the comprehensive real estate tax bomb, homes must be sold by the end of May next year.

[Image source=Yonhap News]

According to the government and the National Assembly on the 19th, if owners of three or more homes or two homes in regulated areas do not dispose of their taxable homes by May next year, they will have to pay comprehensive real estate tax at rates ranging from 1.2% to 6.0%, instead of the previous rates of 0.6% to 3.2%, based on the tax base brackets.

The government and ruling party are pushing for the passage of a real estate tax reform bill containing these details during the July extraordinary session of the National Assembly. The submitted bill specifies that the revised comprehensive real estate tax law will take effect from January 1, 2021.

The tax base date for the 2021 comprehensive real estate tax payment is June 1. The tax will be levied based on the number of homes owned and their official assessed prices at that time. This means that the end of May next year is the deadline to dispose of homes to avoid the comprehensive real estate tax bomb.

Compared to the current rates, for multi-homeowners, the tax rates will increase as follows: for a tax base of 300 million KRW or less, from 0.6% to 1.2%; for 300 million to 600 million KRW, from 0.9% to 1.6%; for 600 million to 1.2 billion KRW, from 1.3% to 2.2%; for 1.2 billion to 5 billion KRW, from 1.8% to 3.6%; for 5 billion to 9.4 billion KRW, from 2.5% to 5.0%; and for over 9.4 billion KRW, from 3.2% to 6.0%.

Additionally, single-homeowners or owners of two or fewer homes will have to pay comprehensive real estate tax at rates ranging from 0.6% to 3.0%, instead of the current 0.5% to 2.7%.

Corporations are no exception. Starting next year, the government and ruling party will apply a flat comprehensive real estate tax rate of 3.0% to corporations owning two or fewer homes, and a 6.0% rate to corporations owning three or more homes or two homes in regulated areas.

Moreover, the benefit of deducting 600 million KRW when calculating the tax base will be eliminated, and there will be no cap on the tax burden.

Currently, when corporations dispose of real estate, capital gains are taxed at a basic rate of 10-25%, with an additional 10% tax applied to residential properties. From next year, the additional tax rate will be raised to 20%, resulting in a maximum tax rate of 45% on corporate housing capital gains.

This content was produced with the assistance of AI translation services.