'Jongbuse Bomb' Hits Middle Class Too... 1 in 4 Seoul Apartments Subject to It

24.2% of Apartments in Seoul with Official Prices Over 900 Million KRW
About 80% of Comprehensive Real Estate Tax Targets Are in Seoul
Kim Eun-hye: "Urgent Need to Reconsider Comprehensive Real Estate Tax Criteria"

[Image source=Yonhap News]

[Asia Economy Reporter Koo Chae-eun] Due to rising housing prices, it has been revealed that one in four apartments in Seoul is subject to the comprehensive real estate holding tax (종합부동산세, 종부세). The 종부세, originally designed as a ‘wealth tax’ paid by a very small fraction within 1% at the time of its introduction, has effectively become a ‘middle-class tax’ or a ‘Seoul residency tax,’ critics say.

According to data on the number of apartments nationwide by official housing price brackets, submitted by the Ministry of Land, Infrastructure and Transport to Kim Eun-hye, a member of the National Assembly from the People Power Party and the Land, Infrastructure and Transport Committee, the proportion of apartments in Seoul with an official price of 900 million KRW or more (406,167 units) accounts for about 24.2% of all officially priced apartments in Seoul (1,680,864 units) this year.

The share of apartments priced at 900 million KRW or more, which was around 12.37% in 2019 and 16.8% in 2020, has increased to the 24% range this year, significantly expanding the scope of 종부세 targets. The term ‘multi-family housing’ includes apartments, row houses, multi-unit houses, dormitories, and others. According to Kim Eun-hye’s office, the government stated that the proportion of multi-family housing in Seoul subject to 종부세 with an official price of 900 million KRW or more is 16%, but when limited to apartments, this proportion rises to about 25%.

(Source: Office of Kim Eun-hye, People Power Party)

Looking at 종부세-targeted apartments by region, Seoul accounts for 80%. Among the 515,084 apartments nationwide priced at 900 million KRW or more, 406,167 units are in Seoul, making up 78.9%. This is a significant gap compared to Gyeonggi Province (15%), Busan (2.4%), and Incheon (0.2%). 종부세 is classified as a national tax, so the tax revenue goes to the central government rather than city or district governments.

The number of apartments subject to 종부세 is also rapidly increasing quantitatively. This year, the number of apartments in Seoul priced at 900 million KRW or more (406,167 units) increased by about 120,000 units compared to the previous year (275,959 units), a growth rate of 47.2%. Last year as well, apartments priced at 900 million KRW or more increased by 38.2% compared to the previous year (199,646 units), broadening the scope of 종부세 payers.

Considering the unique characteristic that 종부세 is levied on an individual basis and the heavy burden on multi-homeowners, the actual number of houses that should be included in the 종부세 target is likely to increase.

[Image source=Yonhap News]

Kim Eun-hye, a member of the People Power Party, said, “The comprehensive real estate holding tax, which was said to be paid by the top 1%, has been distorted into a middle-class tax under the current government. Especially with the sharp rise in official housing prices this year, Seoul citizens are engulfed in tax fear,” adding, “The 종부세 bomb will negatively affect not only households but also the recovery of the domestic economy, so a comprehensive review of the 종부세 taxation criteria is necessary.”

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