1-Homeowners Becoming 'Bujasae'... Unrealistic Comprehensive Real Estate Tax Standards

"Rich People's Comprehensive Real Estate Tax Has Become a Universal Property Tax"
Tax Base of 900 Million Won Remains Unchanged for 12 Years

The view of an apartment in Seoul city

As the publicly announced prices of apartments in multi-family housing have surged, not only the outskirts of northern Seoul but also single-homeowners of apartments in provincial areas have been massively included as taxpayers for the comprehensive real estate holding tax. There is an evaluation that the original legal purpose of the comprehensive real estate holding tax, which is to enhance tax burden fairness by taxing high-value real estate holders, has been rendered meaningless. This is the result of the government sharply raising the publicly announced prices every year under the pretext of realization, while the standard for "high-priced housing" has not been adjusted for 12 years regardless of market conditions.

◆Even Small and Medium-Sized Apartments in Outskirts Are "Required to Pay Comprehensive Real Estate Holding Tax"= According to the Korea Real Estate Board's Real Estate Public Price Information on the 17th, as the government raised the publicly announced prices of apartments by an average of more than 19%, the publicly announced prices in the outskirts of Seoul surged by several hundred million won at once, causing even medium-sized apartments to exceed the 900 million won threshold for single-homeowner comprehensive real estate holding tax taxation, resulting in a flood of apartments subject to the tax.

The publicly announced price of the 84㎡ (exclusive area) apartment at 'Lotte Castle Noblesse' in Jeonnong-dong, Dongdaemun-gu, Seoul, rose from 785 million won last year to 994 million won this year, a 26.6% increase, instantly becoming subject to the comprehensive real estate holding tax. The publicly announced price of the 84㎡ apartment at 'e-Pyeonhansesang Yeomchang' in Yeomchang-dong, Gangseo-gu, rose from 728 million won last year to 969 million won this year, a 33.1% increase. The 84㎡ apartment at 'Singil Central I-Park' in Singil-dong, Yeongdeungpo-gu, jumped from 699 million won to 916 million won during the same period, an increase of over 200 million won.

This phenomenon is also seen in the Gyeonggi area and provinces. The publicly announced price of the 90㎡ apartment at 'Gwanggyo I-Park' in Woncheon-dong, Yeongtong-gu, Suwon, Gyeonggi-do, rose from 727 million won last year to 1.042 billion won. Even in Busan, the 84㎡ apartment at Samik Beach in Namcheon-dong, Suyeong-gu, jumped from 515 million won to 945 million won. Apartments that were subject to reduced property tax rates for homes priced below 600 million won have changed to being subject to the comprehensive real estate holding tax within a year.

Small apartments of 59㎡ have also consecutively become subject to the comprehensive real estate holding tax. The 59.77㎡ apartment at 'e-Pyeonhansesang Oksu Park Hills' in Oksu-dong, Seongdong-gu, recorded a publicly announced price of 943 million won this year, a 24.6% increase from 757 million won last year. The 59.98㎡ apartment at 'e-Pyeonhansesang Mapo River Park' in Yonggang-dong, Mapo-gu, also rose 21% from 853 million won last year to 1.032 billion won. The 59㎡ apartment at 'Raemian Central Suite' in Byeollyang-dong, Gwacheon-si, rose from 884 million won to 992 million won.

◆Comprehensive Real Estate Holding Tax Becoming a Tax on Ordinary People, Not Just the Wealthy= According to the Ministry of Land, Infrastructure and Transport, due to this year's increase in publicly announced prices, the number of apartments with publicly announced prices exceeding 900 million won, which are subject to the comprehensive real estate holding tax for single-homeowners, will increase by more than 215,000 units compared to last year. Nationwide, this represents a 69.6% increase, and in Seoul, a 47.0% increase. Apartments subject to the comprehensive real estate holding tax are appearing even in Ulsan and Chungbuk, where there were none before. Among the 17 metropolitan cities and provinces, only four places?Gangwon-do, Jeonbuk, Gyeongbuk, and Gyeongnam?have no apartments subject to the comprehensive real estate holding tax.

This is the background for criticism that the comprehensive real estate holding tax, which is a special-purpose wealth tax, has effectively become a universal holding tax. Professor Seo Jin-hyung of Gyeongin Women's University (President of the Korean Real Estate Society) said, "Although the comprehensive real estate holding tax is imposed on the wealthy and rich, the rapid increase in publicly announced prices has created a situation where even ordinary single-homeowners have to pay this wealth tax."

The government plans to gradually raise the realization rate of publicly announced prices, currently around 70%, to 90%. This structure inevitably leads to an increase in the number of ordinary single-homeowners paying the wealth tax even if housing prices do not rise. If the housing price trend continues as is and the government’s plan to raise the realization rate of publicly announced prices proceeds, there is even a prediction that by 2025, all apartments over 84㎡ in Seoul will be subject to the comprehensive real estate holding tax. The median price of apartments in Seoul already exceeded 900 million won last year.

Accordingly, voices calling for raising the standard for high-priced housing subject to the comprehensive real estate holding tax are growing louder.

The reason for the sharp increase in the number of homes subject to the comprehensive real estate holding tax is the tax standard, which has not changed for 12 years. It is not that everyone has become wealthy and thus pays the wealth tax, but that the wealth tax standard remains stuck in the past, causing an excessive increase in taxpayers. Professor Seo said, "Imposing a wealth tax at the median price level of Seoul apartments is absolutely inconsistent with public sentiment," adding, "At minimum, the comprehensive real estate holding tax threshold should be raised from the current 900 million won to 1.5 billion won, or the tax should be exempted entirely for single-homeowners."

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