MoEF "Jongbuse Tax Burden, Limited Pass-Through to Tenants... Not Heavy for Single Household Single Homeowners"

Ministry of Economy and Finance Distributes Explanation Materials to Refute Criticism of 'Comprehensive Real Estate Tax Bomb'

"It is Appropriate to Calculate the Proportion of Comprehensive Real Estate Tax Notice Recipients Based on Total Population, Not Households"

[Image source=Yonhap News]

[Sejong=Asia Economy Reporter Kim Hyunjung] Regarding the Comprehensive Real Estate Tax (종합부동산세) notices for this year's housing tax payments, the Ministry of Economy and Finance stated that "the possibility of the tax burden being passed on to tenants is limited" and "the burden on single-homeowners is also not significant." This response came amid a flood of criticism labeling the notices as a 'Comprehensive Real Estate Tax Bomb.'

On the afternoon of the 23rd, the Ministry distributed explanatory materials titled 'The Facts About Comprehensive Real Estate Tax Notices,' addressing key issues. The main points were that the comprehensive real estate tax is not a 'bomb,' the burden on single-homeowners is not large, and the tax burden being passed on to tenants will also be limited.

In particular, the Ministry argued that the majority of the increased tax amount is borne by multi-homeowners and corporations, and that the tax burden on single-homeowners is not significant. The Ministry explained, "Of the 3.9 trillion KRW in increased housing-related comprehensive real estate tax notices this year, multi-homeowners (individuals owning two or more homes) and corporations bear 92%, equivalent to 3.6 trillion KRW," adding, "This should be understood as an expected policy effect of strengthening the comprehensive real estate tax on multi-homeowners and corporations to stabilize the housing market."

Furthermore, "Single-homeowners bear 3.5% (132,000 people, 200 billion KRW) of the 5.7 trillion KRW in housing-related comprehensive real estate tax notices," the Ministry said, adding, "Homeowners with properties valued at approximately 1.6 billion KRW or less are excluded from taxation, and even for owners of high-priced homes exceeding 1.6 billion KRW, measures such as increased deduction amounts to protect actual buyers, enhanced deductions for the elderly, and special provisions for jointly owned single homes by couples keep the tax burden at a modest level." Additionally, "Among all single-homeowners, 72.5% (95,000 people) own homes valued at 2.5 billion KRW or less, with an average tax amount of about 500,000 KRW," it added.

Regarding speculation that the tax burden will be passed on to tenants, the Ministry also refuted this as "limited." It stated, "Rent levels are determined by market conditions, and landlords cannot arbitrarily adjust rents during the contract period, limiting unilateral burden transfer," and assessed, "With an increase in jeonse (long-term deposit lease) listings and a slowdown in jeonse price rises, the overheated market phase is easing, making unilateral rent increases difficult." It further explained, "Institutional safeguards such as the right to request contract renewal and the rent ceiling system (limited to 5%) have been established to stabilize the rental market and protect tenants. Additionally, there are public rental housing units (approximately 1.7 million) and privately registered rental housing units (approximately 1.1 million) exempt from the comprehensive real estate tax, limiting the pass-through of tax burdens."

Other points highlighted included ▲ application of a tax burden cap of 1.5 times for general two-homeowners and 3 times for those owning three or more homes (including two homes in regulated areas) to prevent excessive tax burdens ▲ tax burden relief and installment payment systems for long-term holders and elderly retirees who are single-homeowners ▲ utilization of tax revenue fully allocated to local governments for regional balanced development ▲ globally low levels of property holding tax burden (holding tax/property value), emphasizing that the comprehensive real estate tax is not excessively imposed.

Regarding the government's assessment that "98% of the population is unaffected," and the argument by some that the calculation should be based on the number of households, the Ministry stated, "The comprehensive real estate tax is an individual-based taxation system that does not aggregate homes within a household but determines tax liability based on each household member," and argued, "It is appropriate to calculate the proportion of notice recipients based on the total population, not households or families." It emphasized that in cases where a married couple each owns one home within a household, they are considered multi-homeowners by household standards but are taxed as single-homeowners individually (two taxable individuals), and even when a couple jointly owns one home, it is considered a single home by household standards but taxed as two single-homeowners individually (two taxable individuals).

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