[Ryu Taemin's Real Estate A to Z] Houses with Official Prices Under 100 Million Won... Are They Safe from Tax Bombs?

Exemption from Acquisition Tax Surcharge for Multiple Homeowners
Different Calculation Criteria by Tax Item
Tax Burden Arises According to Number of Owned Homes

[Image source=Yonhap News]

[Asia Economy Reporter Ryu Tae-min] Recently, low-priced houses with a publicly announced price under 100 million KRW have been gaining popularity in the real estate market. Houses priced under 100 million KRW receive various tax benefits such as acquisition tax and capital gains tax exemptions to protect actual buyers. However, since the calculation criteria differ by tax category and unexpected taxes may be imposed as the number of owned houses increases, caution is required when making decisions.

The popularity of houses under 100 million KRW is due to the exemption from acquisition tax surcharges for multi-homeowners. Previously, through the July 10 measures last year, the government raised acquisition tax rates from a maximum of 3% to up to 12% depending on the number of houses owned, but applied only the basic rate (1.1%) for houses with a publicly announced price under 100 million KRW. For residential officetels, the combined standard market value of the building and attached land is used as the basis, and if it is under 100 million KRW, acquisition tax surcharges for multi-homeowners are not applied.

However, acquisition rights or pre-sale rights are subject to acquisition tax surcharges for multi-homeowners regardless of the publicly announced price. Houses located in redevelopment or reconstruction project zones or small-scale maintenance law enforcement zones are also subject to surtax. In particular, even if the publicly announced price is adjusted to 100 million KRW by acquiring only shares or attached land, acquisition tax is surcharged because the entire house’s standard market value is used as the basis for calculation.

Caution is also needed when calculating capital gains tax. Houses with a publicly announced price under 100 million KRW are excluded from capital gains tax surcharges but are included in the total number of houses owned in principle. For example, if one person owns one house under 100 million KRW and one regular house simultaneously, the regular house does not qualify for the one household one house capital gains tax exemption. Also, the house under 100 million KRW can only receive the capital gains tax surcharge exemption if its publicly announced price is 300 million KRW or less at the time of transfer.

The criteria for counting as a non-homeowner differ in subscription applications. For private housing subscriptions, owning a house with an exclusive area of 60㎡ or less and a publicly announced price under 80 million KRW (130 million KRW in the metropolitan area) is considered non-homeownership. On the other hand, the criteria for public housing are stricter, recognizing non-homeownership only if the house area is 20㎡ or less.

There are no special tax benefits for low-priced houses in the comprehensive real estate holding tax. Houses under 100 million KRW are included in the count of owned houses, making it difficult to avoid the heavy surtax imposed depending on the number of houses owned.

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