Seoul City Councilor Choo Seung-woo: "Bold Institutional Reforms Needed to Ease Comprehensive Real Estate Tax"

[Asia Economy Reporter Jong-il Park] Seoul Metropolitan Council member Choo Seung-woo (Democratic Party, Seocho 4) stated, “Contrary to the original intent of the Comprehensive Real Estate Holding Tax (종합부동산세), it is creating victims amid changes in the real estate market environment,” and added, “Bold institutional improvements are needed, such as easing the scope of the tax to the top 2% and expanding the deferral of payments.”

The Comprehensive Real Estate Holding Tax was introduced in 2005 as a taxation system to curb multi-home ownership. At that time, it was primarily imposed on multi-homeowners, with an exception allowing only owners of high-priced single homes in the top 1% of official property prices.

However, criticism has been raised that the tax has failed to properly reflect the rapidly rising official property prices and is even destabilizing the housing security of single-home low-income residents, contrary to its original purpose.

According to data analyzed by Council member Choo, the top 1% of official property prices at the time the tax was introduced was around 940 million KRW, but currently, the top 1% in Seoul has surpassed 2.35 billion KRW. In other words, the top 1% at that time has effectively expanded to 4% now.

Additionally, the number of multi-unit housing (apartments, multi-family, row houses) in Seoul with official property prices exceeding 900 million KRW increased by 366%, from 88,560 units in 2017 to 412,798 units this year, bringing most Seoul residences under the influence of the Comprehensive Real Estate Holding Tax.

Professor Kim Seung-wook of the Department of Land Administration at Shinhan University commented, “The reason the Comprehensive Real Estate Holding Tax is controversial is that the tax base is mismanaged, imposing excessive burdens on taxpayers,” and expressed concern that “since this tax is a form of double taxation where taxpayers pay additional high rates, it is difficult to accept and will face strong tax resistance when existing single-homeowners become newly liable even if they did not purchase additional homes despite rising house prices.”

In response, Council member Choo identified imposing the tax only on the top 2% of official property prices as the most reasonable alternative. Currently, about 526,000 households nationwide are subject to the tax, but if the tax is targeted at the top 2%, the number of liable households would drastically decrease to around 280,000, and when converted to four-person households, the beneficiaries could reach approximately one million people.

Currently, the party leadership is discussing options such as setting the tax base at the top 2% or raising the taxable threshold from 900 million KRW to 1.2 billion KRW, with the former reportedly preferred within the party.

Fixing the tax base as a percentage allows the total number of taxable households to be maintained even if housing prices rise in the future.

Council member Choo stated, “We will discuss various issues including the Comprehensive Real Estate Holding Tax and the realization of official property prices, firmly reduce the burden on actual homebuyers, and focus all efforts on achieving housing stability for Seoul citizens by placing policy emphasis on the homeless, such as young newlyweds.”

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