"Fines, Not Taxes," "Should I Just Gift It?"... Bank PB Centers Also in Turmoil

Elderly Primary Homeowners and Others
Say "What to Do" About the Sharp Increase in Tax Amounts

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[Asia Economy Reporter Kim Hyo-jin] "Did I raise the house prices? I have just lived in this house for half my life, so what kind of sudden misfortune is this?" "What kind of tax is this? It's a fine."

This year, as the comprehensive real estate tax (종합부동산세, 종부세) was notified, private banking (PB) centers at commercial banks have become quite busy. Many clients are shocked by tax amounts that have increased by more than double in some cases and are overwhelmed about how to manage their assets going forward.

According to PB center officials, most complaints come from elderly homeowners living on pensions without significant income. This is believed to be influenced by the approximately 140,000 increase in single-homeowners newly subject to taxation.

On the 27th, a PB center official from Bank A in the Gangnam area of Seoul said, "Among customers who have lived as single-homeowners for 20 to 30 years, regardless of investment or speculation, there are relatively many complaints from older clients." For example, an elderly person who used to pay around 6 to 7 million KRW in holding taxes including comprehensive real estate tax and property tax suddenly received a bill exceeding 10 million KRW and lamented, 'I really don't know what to do.'"

The official added, "In such cases, the tax could rise to the mid-10 million KRW range next year, so the entire asset management structure may need to be completely reorganized. Owning a house in Gangnam might seem to indicate wealth and comfort, but cash is generally tied up in various places, so the actual situation is quite different."

A PB center official from Bank B also shared clients' anxieties based on recent consultations. Mr. Choi Jin-su (alias), 69 years old, who owns and resides in a medium-sized apartment in Gangdong-gu, Seoul, has an annual income of about 25 million KRW including pension, but must pay approximately 8 million KRW in holding taxes this year. This means paying about one-third of his income in taxes, which effectively forces him to maintain a 'basic living' standard.

The official expressed regret, saying, "He is even considering whether to break all savings and investment products and give up living in Seoul."

A PB center official from Bank C said, "Many clients are also considering gifting their property, but if their children own even a small apartment based on bank loans, the tax burden could shift to the children, making the situation quite complicated." He added, "Ultimately, we can only recommend discussing various options with a tax accountant, but often no clear answers come out even after consultations."

The official continued, "There may be a need to develop specialized advisory services related to tax issues. All conditions related to asset management are worsening, including low interest rates, strengthened regulations and taxation on homeownership, and difficulties with gifting," expressing concern.

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