"Government Predicts 4 Trillion Won in Comprehensive Real Estate Tax Revenue, Backing 'Multi-Homeowners Selling Houses' Policy Success"

Announcement of 2020 Tax Law Amendments Reflects Real Estate Policy Effects Immediately in Estimates
Number of Market-Exiting Households Not Disclosed
Yejungcheo Predicts "Up to 10 Trillion Won from Individual Comprehensive Real Estate Tax" but Shows Discrepancy

[Image source=Yonhap News]

[Sejong=Asia Economy Reporter Kim Hyunjung] While estimating the tax revenue effect of the '2020 Tax Reform Bill,' the government assumed a situation where the '7·10 Real Estate Measures' take effect in the market, leading some multi-homeowners to sell their houses. This essentially presumes the policy's success, stating that the goal of 'multi-homeowners selling houses,' which failed in the previous twenty-one attempts, will finally be realized this time.

According to the Ministry of Economy and Finance on the 23rd, the government projected that the comprehensive real estate tax revenue will increase by a total of 4.1987 trillion KRW from 2021 to 2025 in the 2020 Tax Reform Bill announced the day before. It is expected to increase by 665.5 billion KRW next year compared to this year, and from the following year, about 883.3 billion KRW more will be collected annually. Earlier, the Ministry of Economy and Finance announced that the comprehensive real estate tax rates for 1-2 homeowners would be raised from 0.5-2.7% to 0.6-3%, and for multi-homeowners with 3 or more houses and those owning 2 houses in regulated areas, from 0.6-3.2% to 1.2-6.0%.

The government estimated tax revenue based on this increase in comprehensive real estate tax rates and the partial sale of houses by multi-homeowners. On the 20th, Lim Jae-hyun, Director of the Tax Policy Division at the Ministry of Economy and Finance, explained in a pre-briefing, "The strengthening of comprehensive real estate tax and capital gains tax for multi-homeowners is not for the purpose of tax increase but to reduce multi-homeownership through sales," adding, "If the current ownership status is applied as is, the numbers for capital gains tax or comprehensive real estate tax (tax revenue) could be high, but we calculated the comprehensive real estate tax revenue assuming some houses are sold." However, he did not present the number of households entering the market included in the estimation process, citing accuracy concerns. It is unusual for the government to directly reflect the effect of real estate policies immediately when estimating comprehensive real estate tax revenue.

[Image source=Yonhap News]

However, according to the '7·10 Real Estate Measures Tax Revenue Effect' estimation data requested by Rep. Chu Kyung-ho of the United Future Party from the National Assembly Budget Office, the comprehensive real estate tax revenue effect from 2021 to 2025 due to this tax reform is estimated at 9.3087 trillion to 10.1882 trillion KRW for individuals and 5.4612 trillion to 5.5908 trillion KRW for corporations, depending on the increase rate of official property prices. Looking at the National Tax Service's '2019 Housing Comprehensive Real Estate Tax Imposition Notice Status (Individuals + Corporations),' last year's comprehensive real estate tax payment decision amount reached 959.4 billion KRW (provisional tally), a sharp increase of 116.4% compared to the previous year. The number of taxpayers also increased by 29.9% to 510,927 compared to the previous year.

In this regard, Professor Kwon Dae-jung of Myongji University's Department of Real Estate said, "Although comprehensive real estate tax, capital gains tax, and acquisition tax are all being strengthened, considering the existing benefits for rental business operators and tax reduction benefits for the elderly, except for some who have low income and cannot immediately bear the tax burden, it is difficult for properties to come onto the market immediately," adding, "First, a taxation policy that injects money and then collects it from the top (high-income earners and asset owners) is unlikely to gain persuasiveness."

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