Lowering Property Tax Rates for 'Mid-Low Price Housing'... How Much?

Housing priced under 600 million KRW likely to qualify for benefits
Possibility of lowering tax rates by subdividing the tax base

[Asia Economy Reporter Lee Chun-hee] As the government announced its policy to reduce property tax rates on mid-to-low-priced housing, attention is focusing on the scope of the target housing and the extent of the tax rate reduction.

According to the National Assembly and the Ministry of Land, Infrastructure and Transport (MOLIT) on the 30th, the government has begun reviewing a reduction in property tax rates mainly for mid-to-low-priced housing, based on the judgment that the property tax burden on ordinary citizens has increased due to rising house prices and official property prices.

Earlier, Minister Kim Hyun-mi of MOLIT stated at the National Assembly Land, Infrastructure and Transport Committee the day before, "Property tax inevitably corresponds to asset value, and as official property prices are made more realistic, even those owning mid-to-low-priced housing may see their taxes increase," adding, "We plan to announce measures to reduce property tax rates when we release the official property price realization roadmap this October."

A MOLIT official explained, "Since the property tax that people feel is increasing, we intend to prepare measures to reduce it," and added, "We are consulting with related ministries such as the Ministry of the Interior and Safety on measures to mitigate the impact, including reducing property tax rates."

Although a concrete tax rate adjustment plan has not yet been finalized, considering the increase in tax burden due to rising official property prices and the increase in the standard realization rate, industry insiders expect that the 'mid-to-low-priced housing' subject to tax rate reduction will likely be housing with an official property price of 600 million KRW or less. Accordingly, there is talk of subdividing the current 4% property tax bracket uniformly applied to amounts exceeding 300 million KRW and reducing the tax rate within this range.

However, the adjusted property tax rates are expected to be applied starting next year, as property tax is levied based on the status as of June 1 each year. After the announcement of future measures, a new Local Tax Act based on the reduced property tax rates must be enacted before June 1 of next year for the reduced rates to be applied to property tax levied from next year.

Meanwhile, according to data submitted to Rep. Kim Sang-hoon of the United Future Party by the Seoul Metropolitan Government and MOLIT, the number of households in Seoul subject to the 30% cap on property tax burden increased from only 40,541 households in 2017 to 576,294 households this year. This represents a staggering 14.2-fold increase.

The current Local Tax Act limits the increase in property tax to 30% compared to the previous year for households with official property prices exceeding 600 million KRW to prevent a sharp rise in property tax. In particular, in Nowon-gu, the number of households subject to the tax burden cap rose from 2 in 2017 to 2,198 this year, a 1,099-fold increase in three years.

Meanwhile, the government is understood to maintain the current stance on raising the official property price realization rate. A MOLIT official explained, "The current official property price realization rate is about 69% for apartment complexes," adding, "There is no change in the policy to raise this realization rate."

The government plans to announce the official property price realization roadmap in line with the implementation of the revised 'Real Estate Price Disclosure Act' scheduled for this October.

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