Median Seoul Apartment Price Exceeds 900 Million Won... Raising 1-Home Owner Comprehensive Real Estate Tax Threshold Reduces Tax Burden by 1.36 Trillion Won

Tae Young-ho, Member of the Future United Party [Image source=Yonhap News]

[Asia Economy Reporter Lee Chun-hee] Due to the recent surge in housing prices, with the median price of apartments in Seoul exceeding 900 million KRW, the number of taxpayers subject to the comprehensive real estate holding tax (종합부동산세) has significantly increased, resulting in a higher tax burden even for single-homeowners who are actual users. If the tax base threshold for the comprehensive real estate holding tax is raised from the current 900 million KRW to 1.2 billion KRW for single-homeowners, it is estimated that the tax burden will decrease by approximately 1.36 trillion KRW over the next five years.

According to the office of Representative Tae Young-ho of the United Future Party on the 2nd, the National Assembly Budget Office projected in a cost estimate report related to the partial amendment bill of the Comprehensive Real Estate Holding Tax Act proposed by Representative Tae that if the tax base for single-homeowners is raised from 900 million KRW to 1.2 billion KRW, the housing portion of the comprehensive real estate holding tax revenue will decrease by a total of 1.3578 trillion KRW from 2021 to 2025. The Budget Office based its estimate on the 2018 comprehensive real estate holding tax data from the National Tax Service and applied the average official price increase rate over the past three years.

If the tax base is raised to 1.2 billion KRW, the comprehensive real estate holding tax for single-homeowners will decrease by 164.3 billion KRW in the first year, next year. By 2025, the reduction in tax revenue is expected to increase to 357.9 billion KRW, totaling 1.3578 trillion KRW over five years, according to the Budget Office. This averages 271.6 billion KRW annually. Including the accompanying special rural tax (20% of the comprehensive real estate holding tax amount), the total tax revenue reduction over five years will amount to 1.6293 trillion KRW.

Currently, Representative Tae has introduced a bill to amend the Comprehensive Real Estate Holding Tax Act that fixes the fair market value ratio applied in calculating the tax at 90% and raises the housing portion tax base deduction amount to 1.2 billion KRW for single-homeowners and 900 million KRW for multiple homeowners. Representative Tae explained, "Despite inflation and rising housing prices over the past decade, the deduction amount for housing has been frozen for more than 10 years, increasing the actual tax burden on taxpayers," adding, "This bill was proposed to enhance predictability for citizens and reduce their tax burden."

According to KB Kookmin Bank, as of last month, the median price of apartments in Seoul was 918.12 million KRW. Furthermore, according to the Ministry of Land, Infrastructure and Transport, there are 281,188 households in Seoul living in apartments priced at 900 million KRW or more, which is the tax base threshold for single-homeowners, accounting for 11.1% of the total 2,527,872 households surveyed for official prices. Apartments priced at 600 million KRW or more, which is the tax base threshold for multiple homeowners, number 526,810 households, accounting for 20.8%.

The Budget Office added caveats regarding these estimates, stating that ▲the scale of the tax revenue effect may vary depending on the future increase rate of the official housing prices used as the basis for calculating the comprehensive real estate holding tax base ▲the tax revenue effect may vary depending on the distribution trend of the number of houses owned by taxpayers subject to the comprehensive real estate holding tax, as the estimate assumes single-homeowners, two-homeowners, and three-or-more homeowners based on the number of houses held by tax base in 2018 ▲the tax revenue effect may vary if the effects of changes in the age and holding period of tax credit recipients are reflected.

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