Assemblyman Kim Du-kwan, "Excluding Rental Business Owners from Comprehensive Real Estate Tax Aggregation Distorts Policy Goals"

Assemblyman Kim Du-kwan speaking.

[Asia Economy Yeongnam Reporting Headquarters Reporter Lee Sang-hyun] According to an analysis of data received from the National Tax Service by National Assembly Planning and Finance Committee member Kim Doo-kwan (Gyeongnam Yangsan-eul), the number of registered housing rental business operators exempted from the comprehensive real estate holding tax (종부세) in 2019 was 82,506, with a total of 1,398,632 houses.

In the same year, the number of registered private rental houses was 1,507,865, meaning that 92.7% of the houses owned by rental business operators were exempt from the comprehensive real estate holding tax.

The exemption from the comprehensive real estate holding tax for private housing rental business operators was initially applied in 2008 to construction rental housing with insufficient leasing, and in 2009 it was expanded to rental business operators who purchased unsold houses outside the metropolitan area, reflecting measures to address the housing market slump in local regions.

However, since 2011, the tax exemption has also been applied to purchased rental housing in the metropolitan area, and benefits for metropolitan rental housing have continued to this day.

The year with the highest number of rental houses exempted from the comprehensive real estate holding tax was 2017, with 1,662,189 houses excluded from the tax.

Compared to 2017, the number of exempted houses decreased by more than 260,000 in 2019, but during the same period, the number of rental houses exempted from the tax in Seoul increased from 370,174 to 436,008, an increase of 65,834 houses. Gyeonggi-do also saw an increase from 110,400 to 149,621 houses, an increase of 39,617 houses.

Additionally, the number of rental business operators exempted from the comprehensive real estate holding tax increased by nearly 40,000, from 43,107 in 2017 to 82,506 in 2019, with 21,000 more rental business operators in Seoul and 11,000 more in Gyeonggi-do.

In 2019, the proportion of rental business operators exempted from the comprehensive real estate holding tax among all rental business operators was 17.16% nationwide, and 22.6% in Seoul.

Rep. Kim pointed out, “The comprehensive real estate holding tax exemption for private housing rental business operators, which was implemented to revive the local construction market, is now applied to more than 90% of rental houses regardless of region, indicating that the policy goal has been distorted.” He added, “Although the number of houses exempted from the tax has decreased nationwide, the increase in both exempted rental business operators and rental houses in Seoul and Gyeonggi-do proves that this system has become a means of real estate speculation for metropolitan area operators.”

Rep. Kim also stated, “In the case of Seoul, where rental business operators own more than half of the houses with a net floor area of 40㎡ or less, 436,000 houses, accounting for 90% of the 485,000 rental houses, were exempted from the comprehensive real estate holding tax. Since it has been revealed that 20% of rental business operators monopolize rental houses exempted from the tax that account for 90% of all rental houses, claims that various tax benefits including the comprehensive real estate holding tax exemption are for livelihood-type landlords have lost their basis.”

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