Where Is the "No Tax Increase" Promise... 290,000 Single-Homeowners Hit by Comprehensive Real Estate Tax Bomb

Since the Inauguration of the Moon Government, Doubled in 3 Years... Total 318.8 Billion KRW, Record High
Government Struggles to Address Controversies Over Long-Term Holding and Senior Tax Credits
Concerns Over Future Recipients and Increased Tax Burden... Basic Deduction Amount Should Be Raised from 900 Million KRW

[Asia Economy Reporter Kwangho Lee] It has been revealed that the number of people notified to pay comprehensive real estate tax (종합부동산세) this year has reached 290,000. The government is trying to quell the controversy over the so-called 'real estate tax bomb,' emphasizing that the total tax amount for single-homeowners is not large. However, with taxes being imposed even on single-homeowners who reside in their homes, it is insufficient to win back public sentiment that has turned against the policy. Since the Moon Jae-in administration, which emphasized that there would be no 'tax increase,' the comprehensive real estate tax has more than doubled in three years, increasing psychological resistance.

According to the Ministry of Economy and Finance and the National Tax Service on the 27th, the number of single-homeowners subject to the comprehensive real estate tax this year is 291,000, with a notified tax amount of 318.8 billion KRW. Both the number of people and the tax amount are the largest ever recorded.

Compared to 127,369 single-homeowners who paid the comprehensive real estate tax in 2018 (based on the decided tax amount), the number has increased by about 163,000 in just two years. The tax amount, which was 71.78 billion KRW in 2018, has increased by more than 300%. However, there can be about a 10% difference between the notified number and amount and the decided number and amount.

In response to recent controversies over the 'real estate tax bomb,' the government has actively rebutted the claims. It emphasizes that the number of taxpayers subject to the comprehensive real estate tax is only 1.3% of the entire population and that the burden on single-homeowners who actually reside in their homes is relatively small. The Ministry of Economy and Finance explained, "Among the 744,000 taxpayers notified this year (tax amount 4.2687 trillion KRW), those subject to the housing portion are 667,000 (1.8148 trillion KRW), which is about 1.3% of the entire population, and 82% of this amount, 1.496 trillion KRW, is borne by multi-homeowners with two or more houses."

The government also highlighted that single-homeowners can receive tax deductions of up to 70% if they hold their homes long-term or are elderly. The deduction rate for the elderly (aged 60 and above) is 10-30% (increasing to 20-40% from next year), and the long-term holding (over 5 years) deduction rate is 20-50%, which combined can reach up to 70% (80% from next year).

Despite these explanations, dissatisfaction among single-homeowners who received the tax notices has not subsided. On real estate communities, complaints are pouring in such as "The government raised house prices and now demands taxes from the people," "Retired people have limited income and inevitably feel burdened by taxes; does this mean people without money shouldn't even own one house?" and "The official property price adjustment will be strengthened again next year; what will happen then?"

The strong backlash from single-homeowners is due to concerns that their tax burden will increase further. From next year, the comprehensive real estate tax rate for up to two houses will increase by up to 0.3 percentage points compared to this year. Additionally, the fair market value ratio, which is the basis for calculating the taxable standard, will be raised to 95%, inevitably increasing the tax burden. The comprehensive real estate tax, which was previously paid only by some high-priced homeowners in Gangnam, is expected to expand to cover the entire Seoul metropolitan area and regional metropolitan municipalities.

Experts are calling for raising the basic deduction amount for the comprehensive real estate tax from the current 900 million KRW to reflect the changed market conditions. The housing portion of the comprehensive real estate tax is levied when the combined official property price exceeds 600 million KRW, but single-homeowners receive a deduction up to 900 million KRW.

An operator of a real estate community pointed out, "For single-homeowners, buying a house is one of the basic necessities of life, but if they have to pay taxes because house prices have risen, resistance is inevitable," adding, "This is far from punitive taxation by the government." He continued, "Since the comprehensive real estate tax is on unrealized income rather than income from selling the house, dissatisfaction will intensify," emphasizing, "Special measures for single-homeowners who are actual users are necessary."

Lee Jong-bae, Policy Committee Chairman of the People Power Party, criticized, "Having to pay a month's salary in taxes just because you own one house is unreasonable," and said, "Imposing penalties on unrealized gains even on single-homeowners who actually reside in their homes raises the question of who this government is for."

Won Hee-ryong, Governor of Jeju and a potential presidential candidate, also criticized via his SNS, saying, "The so-called real estate tax bomb can only be explained as telling people who cannot afford monthly rent to leave their homes quickly."

Kim Jin-ae, a member of the Open Democratic Party, submitted a related amendment bill to the National Assembly, stating, "For single-homeowners aged 65 or older, with a taxable standard below 600 million KRW, meeting certain income and actual residence period requirements, payment deferral should be allowed for comprehensive real estate tax when selling, inheriting, or gifting the house."

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