"Jointly Owned Housing Should Be Taxed According to Shares"... Opposition Party Effectively Pushes for Property Tax Reduction

Assemblyman Choo Kyung-ho Prepares to Propose Amendment to Local Tax Act

[Asia Economy Reporters Kim Hyun-jung (Sejong), Lee Hyun-joo] The opposition party People Power Party is preparing an amendment to the Local Tax Act to levy property tax on jointly owned houses based on the ownership share of each owner. This is expected to partially reduce the increased property tax burden caused by the rapid rise in real estate prices, and it is interpreted as an effort to win public favor by focusing on real estate tax relief following the ruling party.

According to the National Assembly on the 16th, Representative Chu Kyung-ho of the People Power Party is preparing to propose an amendment to the Local Tax Act that reflects the ownership share when calculating the tax base for cases where a house is owned by two or more people or where the land and building owners are different (joint ownership). Under the current law, when calculating property tax on jointly owned houses, the tax base is the sum of the taxable values (officially assessed price × fair market value ratio, 60%), and the tax rate is applied to this total to calculate the property tax amount, which is then divided among each owner for taxation. This calculation method applies the tax rate to the total value regardless of ownership share, resulting in owners being taxed at a higher tax base bracket than their actual ownership share.

For example, if a house with an official price of 600 million KRW (tax base 360 million KRW) is owned 50% each by two people, the payable property tax is 630,000 KRW (assuming a single-household). The amount paid per person based on ownership share is 315,000 KRW. However, applying the amendment, the tax base reflecting the ownership share (180 million KRW) would be taxed at the corresponding rate (0.2%), reducing the payable tax per person to 180,000 KRW. Representative Chu pointed out, "Property tax should be levied on property that the owner possesses and can dispose of, but applying the tax rate to the entire taxable value regardless of ownership share results in an unfair situation where a higher tax rate is applied."

Recently, as house prices have surged, the officially assessed prices used for the tax base have naturally increased, causing the amount of property tax paid to rise sharply every year. According to the National Assembly Budget Office, this year's official prices increased by an average of 16.3% for houses nationwide and 10.4% for land, recording a higher growth rate compared to the average annual increase in official prices from 2018 to 2020 (houses 5.4%, land 6.8%) due to the rise in real estate market prices and the increase in official price realization rates. The house price increase rate is the highest in 11 years since 2010.

Accordingly, property tax revenue, which was around 4 trillion KRW in 2017, rose to 4.5 trillion KRW in 2018, 5.1 trillion KRW in 2019, and was estimated to be around 5.5 trillion KRW last year. This year, it is expected to reach 6 trillion KRW.

The government has also repeatedly pushed for property tax relief. In particular, since property tax is a tax that homeowners generally have to pay, unlike comprehensive real estate tax, a special reduction in property tax rates for single-household owners was introduced, lowering the tax rate by 0.05 percentage points for houses with an official price of 600 million KRW or less as of last November. Currently, the ruling party is discussing further lowering this by 0.5 percentage points in the real estate special committee.

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