Record-High Comprehensive Real Estate Tax Notice... Ultimately, Only Endurance Remains

Eunma + Marea Pu Comprehensive Real Estate Tax Rises 180% from Last Year to Reach 54.41 Million KRW

No Solution for Single-Homeowners with 'Smart One House'... Vague Expectations for the Presidential Election

[Asia Economy Reporters Kangwook Jo, Minyoung Kim] "Just thinking about receiving this year's comprehensive real estate tax bill keeps me awake at night."

A (64-year-old) retired teacher who lived in Jamsil Jugong Complex 5 for over 30 years, Mr. A, sighs these days worrying about the comprehensive real estate tax bill expected at the end of this month. Due to the sudden surge in the current house price, he now faces paying various taxes about 10 million KRW higher than usual. With no income other than his pension and owning only one house, Mr. A, who suddenly has to bear a large sum of money, lamented, "Is it my responsibility that the house price went up?"

With the comprehensive real estate tax bill issuance just over two weeks away, the housing market is unsettled. This is because taxpayers are expected to receive an unprecedentedly high bill compared to last year. However, unlike wealthy multi-homeowners, single-homeowners with a ‘smart one house’ face deep worries as there is no proper way to resolve the sharply increased tax burden.

◆ Holding ‘Eunma + Marea Pu’ Increases by 35 Million KRW... ‘Record-Breaking’ Comprehensive Real Estate Tax Bill = The market views this year’s comprehensive real estate tax bill, scheduled to be sent around the 22nd, as record-breaking. This is due to the government’s official price realization roadmap causing a significant rise in official prices, and the tax rates for three-homeowners and two-homeowners in regulated areas increasing sharply from the previous 0.6?3.2% to 1.2?6.0% starting this year. The fair market value ratio, which is the basis for comprehensive real estate tax assessment, also rose from 90% last year to 95% this year.

According to a simulation of this year’s holding tax by Woobingtak, team leader of Shinhan Bank’s Real Estate Investment Advisory Center, a two-homeowner holding an 84㎡ (exclusive area) apartment in Gangnam-gu’s Eunma Apartment and an 84㎡ apartment in Mapo-gu’s Mapo Raemian Prugio must pay 54.41 million KRW in comprehensive real estate tax this year. This is a 180% increase from last year’s 19.41 million KRW. Including special rural taxes and property taxes, the holding tax, which was around 30 million KRW last year, will approach 75 million KRW this year. Also, for two-homeowners holding an 84㎡ Eunma Apartment and an 82㎡ apartment in Songpa-gu’s Jamsil Jugong Complex 5, the comprehensive real estate tax rises 167% from 27.47 million KRW to 73.36 million KRW.

◆ "Do I Have to Work Even After Retirement Because of the Comprehensive Real Estate Tax?" = The problem lies with high-priced single-homeowners, not multi-homeowners. Although they briefly feel satisfaction owning a ‘smart one house’ as house prices rise, they are now deeply worried about the unbearable tax bomb. According to a mock analysis by the Ministry of Land, Infrastructure and Transport, the official price of an apartment currently valued at about 3.75 billion KRW is set at 3 billion KRW this year, up 8.3% from last year’s 2.77 billion KRW. Accordingly, the total holding tax including comprehensive real estate tax for single-homeowners under 60 years old is expected to be 33.6 million KRW this year. Compared to last year’s total holding tax of 24.43 million KRW, this is a 37.5% increase. Also, for apartments with an official price set at 2 billion KRW and a market price around 2.67 billion KRW, the official price rose 13.6% from last year, increasing the holding tax including comprehensive real estate tax from 10 million KRW last year to 14.46 million KRW this year, a 44.6% rise.

◇ The Only Way Is to Hold On... Vague Expectations for the Presidential Election = Some expect that the increased tax burden will lead to more listings in the currently stagnant housing market, but many disagree. Those who planned to sell have already done so, and measures such as prior gifting have been taken to prepare for the strengthened holding tax. From January to August this year, the number of apartment gifts nationwide totaled 58,298, accounting for 6.8% of all transactions.

The presidential election scheduled for March next year is also a key variable. Hapsu Park, senior real estate specialist at KB Kookmin Bank, said, "Both multi-homeowners and high-priced single-homeowners largely want to wait and see until the presidential election," adding, "Rather, the burden of capital gains tax is as heavy as the comprehensive real estate tax, causing only the side effect of blocking exit routes."

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