[2020 National Audit] Seoul Single-Family Homes Over 5 Billion KRW Have Only 25% Realization Rate of Officially Announced Prices

[Asia Economy Reporter Inho Yoo] It has been pointed out that the official property price realization rate of single-family houses traded for over 5 billion KRW in Seoul is low, resulting in property taxes not being properly imposed.

According to data submitted by the Ministry of Land, Infrastructure and Transport to So Byung-hoon, a member of the National Assembly Land, Infrastructure and Transport Committee from the Democratic Party of Korea, an analysis comparing the actual transaction prices and this year's official prices of 101 single-family houses traded for over 5 billion KRW in Seoul in 2019 revealed that the official price realization rate of these 101 single-family houses was only 25%. This indicates that the official prices of single-family houses do not reflect the actual transaction prices.

Among the 101 single-family houses traded for over 5 billion KRW last year, 53% had an official price realization rate that did not exceed 20%. There were also 30 single-family houses with an official price realization rate of 10% or less.

In fact, a single-family house in Gangdong-gu, Seoul, which was traded for 28.2884 billion KRW in March 2019, had an official price in 2020 of only 1.405 billion KRW, about 5% of the actual transaction price. Due to the underestimated official price, the owner of the house paid 57.91 million KRW less in property tax.

A single-family house traded for 16 billion KRW in Seocho-dong, Seocho-gu in April 2019 had an official price of 555 million KRW in 2020, resulting in an official price realization rate of only 3%. If the official price realization rate of this house had been 60%, the owner would have had to pay about 34.96 million KRW in property tax, including local education tax and urban planning tax, but due to the official price not reflecting the actual transaction price, it is estimated that only about 1.3 million KRW in property tax was paid.

The under-assessed property tax amounted to about 200 million KRW just for the top 10 single-family houses traded in 2019, and if all 101 single-family houses traded for over 5 billion KRW reflected about 60% of the actual transaction prices, the under-assessed property tax would amount to approximately 988.18 million KRW.

Representative So said, “This inevitably causes issues of tax equity where some pay more taxes and others pay less,” and added, “The government needs to make greater efforts to enhance the reliability of the real estate price disclosure system.”

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