Government to Promote Comprehensive Real Estate Tax Deferral for Single-Home Owners Aged 60 and Over... Considering Freezing Official Property Prices Next Year

Review of Long-term Residence Tax Credit and Tax Burden Cap Details

On the 22nd, when the National Tax Service began sending comprehensive real estate tax notices, apartments in the Yongsan and Mapo areas were viewed from the observatory of 63 Square in Yeouido, Seoul. Photo by Kang Jin-hyung aymsdream@

[Sejong=Asia Economy Reporter Kwon Haeyoung] The government is actively considering measures to reduce the property tax burden on single-home owners ahead of the presidential election scheduled for March next year. It plans to announce property tax relief measures alongside the announcement of official prices for apartments and other multi-family housing in March next year.

According to the Ministry of Economy and Finance on the 26th, the government is reviewing previously prepared measures to ease the tax burden on single-home owners, such as deferring comprehensive real estate tax payments for the elderly and introducing long-term residence tax credits.

The payment deferral for the elderly is a plan to allow single-home owners aged 60 or older with an annual comprehensive income of 30 million KRW or less to defer paying the comprehensive real estate tax until they sell, inherit, or receive the property as a gift. The aim is to minimize the tax burden for retired single-home owners with low or no income. This measure was announced as a government proposal in May when the Democratic Party of Korea discussed revising the comprehensive real estate tax threshold to the top 2%. Although it was discarded during the process of raising the tax threshold for single-home owners from 900 million KRW to 1.1 billion KRW (based on official prices), it is reported to have a high possibility of being included in this property tax relief plan due to consensus between the ruling party and the government.

Hong Namki, Deputy Prime Minister and Minister of Economy and Finance, stated on Facebook on the 23rd, "We will consider introducing a payment deferral system for the comprehensive real estate tax for elderly single-home owners as one of the measures to ease their property tax burden."

The government is also reviewing a long-term residence tax credit. This would apply an additional 10% tax credit for single-home owners who have lived in their home for more than 10 years, while maintaining the combined credit limit with existing elderly or long-term holding credits at 80%.

Additionally, there is discussion about effectively freezing next year’s property tax for single-home owners at this year’s level.

One specific measure under consideration is adjusting the upper limit on property tax burdens. Under the current system, property tax is capped at 105-130% of the previous year’s tax amount, and the combined property tax and comprehensive real estate tax is capped at 150% of the previous year’s amount (for single-home owners). Lowering this cap would prevent a sharp increase in tax burden even if official prices rise. The government is reportedly considering limiting the cap to 100%, effectively freezing property tax.

The government is also looking into applying this year’s official prices when calculating next year’s property tax. Since property tax, including property tax and comprehensive real estate tax, is levied based on official prices, applying this year’s prices next year would have the effect of freezing the tax. However, concerns have been raised that temporarily freezing next year’s tax burden could lead to a heavier burden the following year. Moreover, official prices affect not only property tax but also health insurance premiums, raising concerns about excessive ripple effects. The government also holds the view that more cautious consideration is needed regarding adjusting the tax burden cap or reusing official prices compared to the payment deferral for the elderly.

Furthermore, even if tax relief measures for single-home owners are introduced, there may be some exclusion criteria for high-priced homes.

However, no concrete government plan has been established yet regarding easing the property tax burden for single-home owners. A Ministry of Economy and Finance official stated, "Since it is still in the early stages of review, we are keeping all options open and considering various possibilities."

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