[Property Tax Shock] Tax Bomb Becomes Reality... Government Says "98% of Citizens Unaffected" to Divide

Fact Check on the Reality of Bomb Tax Bills
Only 2% Pay? ... 6.4% Compared to Homeowners
Has the Proportion of Single-Homeowners Subject to Comprehensive Real Estate Tax 'Decreased'? ... Actually, 100,000 People 'Surged'

Officials affiliated with the Citizens' Coalition for the Unconstitutionality of the Comprehensive Real Estate Tax posted a notice regarding the unconstitutionality claim of the comprehensive real estate tax at an apartment in Seocho-gu, Seoul on the 22nd. Photo by Kang Jin-hyung aymsdream@

[Asia Economy Reporters Kim Hyun-jung (Sejong), Kim Min-young, Son Sun-hee (Sejong)] Mr. A, a couple co-owner of two houses in one household, was shocked upon receiving this year's electronic property tax bill. The comprehensive real estate tax, which was only 188,000 KRW last year, increased more than tenfold to 1,960,000 KRW this year. Mr. A expressed his frustration, saying, "I thought the cap was three times the amount; should I file an objection?" Mr. B, who also owns two houses under joint ownership with his spouse, saw his tax rise from 4.6 million KRW last year to 20.6 million KRW this year, more than quadrupling. Mr. B lamented, "Even with conservative estimates, I will have to pay about 25 million KRW in property tax next year. The numbers are unbelievable."

Mr. C, in his 50s, who owns Apartment A (191㎡ exclusive area) in Haeundae-gu, Busan, and Apartment B (118㎡) in Bujeon-dong, was stunned by the tax amount on the electronic property tax bill. The tax, which was less than 2 million KRW last year, more than doubled to 5.6 million KRW this year. Mr. C explained, "The apartment where I have lived for 10 years was confirmed for reconstruction last year, causing the apartment price to skyrocket, and the official land price of this apartment more than doubled. The tax amount I have to pay is now greater than my monthly salary as the sole breadwinner, so I have to cut living expenses immediately."

The reality of the 'bombshell' comprehensive real estate tax bills has sparked widespread dissatisfaction. Although the government keeps repeating that "98% of the people are unaffected by this tax," there is a significant gap between this statement and the market's perception. In particular, the number of single-homeowners required to pay the tax and the amount they must pay have increased significantly, leading to criticism that only the government benefits from the net increase in tax revenue.

◆ Only 2% pay? ... 6.4% compared to homeowners = The government has consistently claimed that only 2% of the entire population is subject to taxation and that the majority of people are unaffected by the comprehensive real estate tax. However, experts argue that this figure includes all non-homeowners and thus greatly differs from the actual experience of those who must pay.

Especially since the tax is levied on individuals but the burden ultimately falls on entire households, a simple calculation shows that 4.5% of all households in South Korea (20.92 million households, including single-person households) receive a property tax bill. Compared to the number of homeowners in 2020 (14.697 million), this corresponds to 6.4%.

Nevertheless, the government continues to repeat that "98% of the entire population is not subject to the comprehensive real estate tax." Previously, Lee Eok-won, the first vice minister of the Ministry of Economy and Finance, stated at a policy review meeting, "Although there are exaggerated concerns, it is clear that about 98% of the entire population will not receive a tax bill."

◆ The proportion of single-homeowners subject to the tax ‘decreased’? ... Actually, a surge of 100,000 people = When announcing the number of taxpayers and tax amounts subject to the comprehensive real estate tax this year, the government emphasized that "the proportion of single-homeowners has decreased, while the proportion of multiple homeowners has increased." While this is true in terms of proportion, it is merely an optical illusion caused by the rapid increase in the total number of taxpayers.

The total number of single-homeowners who must pay the tax this year is 400,000, a surge of about 104,000 compared to 296,000 last year. Among them, single-homeowners living in one household increased from 120,000 to 132,000, and other single-homeowners increased from 176,000 to 268,000.

In terms of tax amount, single-homeowners living in one household saw an increase from about 110 billion KRW last year to 200 billion KRW this year, while other single-homeowners increased from about 200 billion KRW to 430 billion KRW. Overall, the total tax burden for single-homeowners doubled from 310 billion KRW last year to 630 billion KRW this year.

In conclusion, although the government's real estate tax policy is indeed focused on multiple homeowners, the surge in housing prices has resulted in a sharp increase in the comprehensive real estate tax burden even for single-homeowners, drawing criticism that cannot be avoided.

◆ Applying the tax burden cap to prevent excessive burden? With the sharp increase in tax amounts, even local areas are affected = The government announced measures to protect actual homeowners, including raising the deduction threshold from 900 million KRW to 1.1 billion KRW in official land price, increasing deductions for elderly taxpayers, and introducing special cases for couples co-owning a single home, claiming these measures alleviate the tax burden.

However, as shown in the aforementioned cases, the comprehensive real estate tax amounts have surged not only in Seoul and the metropolitan area but also in local regions, with some cases showing a tenfold increase compared to last year.

Seo Jin-hyung, president of the Korea Real Estate Society and professor at Gyeongin Women's University, said, "The government's effort to reflect actual land prices has caused the comprehensive real estate tax burden to become unreasonably large, intensifying tax resistance among multiple homeowners and increasing social conflict. As the amount of tax paid increases, the owner's disposable income decreases, leading to reduced consumption and impacting the national economy."

Yoon Ji-hae, senior researcher at Real Estate 114, analyzed, "Given the government's declaration to raise official land prices to 90% of market prices by 2035, if housing prices remain at this year's level, the scope of taxpayers subject to the comprehensive real estate tax will inevitably expand annually, making it meaningless to limit the tax base to 2%. Since the comprehensive real estate tax is levied annually, its impact should be considered over a long term of 10 to 20 years rather than short term."

Meanwhile, as the comprehensive real estate tax bomb becomes a reality, tax resistance movements are intensifying. On real estate online forums, posts calling for constitutional challenges against the tax have appeared, and some apartments in Gangnam are reportedly already initiating procedures for constitutional lawsuits.

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