Holding Tax to Remain at Last Year's Level... Tax Burden Gap Widens Between Gangnam and Non-Gangnam Areas

Government to Announce Publicly Disclosed Property Prices and Property Tax Relief Measures on the 23rd
High-Priced Homes in Gangnam Expected to Decrease, Some Areas May See Slight Increase
Difference from President-Elect Yoon's Pledge: "Adjust Fair Market Value Ratio"

[Asia Economy Reporter Kangwook Cho] As the government is pushing to freeze the property tax and comprehensive real estate tax burden for single-home owners at last year's level this year, the gap in property tax relief between Gangnam and non-Gangnam areas is expected to widen. While the property tax burden on high-priced homes in the Gangnam area will significantly decrease, there are places where the property tax will actually increase. However, based on 2020, the overall property tax burden will decrease. President-elect Yoon Seok-yeol pledged to ease the burden to the 2020 level, so controversy over the extent of future tax relief is expected to continue.

According to the Ministry of Land, Infrastructure and Transport on the 21st, the government plans to announce the "2022 Official Apartment Price Plan" on the 23rd and present a cross-ministerial joint plan to ease the property tax (property tax + comprehensive real estate tax) burden. The likely method of tax relief is to freeze the property tax for single-home owners at the same level as last year. This involves lowering the fair market value ratio, which is the basis for calculating property tax and comprehensive real estate tax, to effectively return the tax burden to last year's level. Originally, the fair market value ratio for the comprehensive real estate tax was scheduled to increase to 90% in 2020, 95% in 2021, and 100% this year. There is also discussion about applying last year's official price, rather than this year's, as the basis for calculating property tax. However, President-elect Yoon previously pledged to "restore the official price to the 2020 level by adjusting the fair market value ratio," which differs from the government's plan.

If last year's basis is simply applied as per the government's plan, there are concerns that the degree of property tax relief will vary greatly by region. The relief effect is more pronounced for high-priced apartments in Gangnam, but in some areas, property tax may slightly increase.

According to a 2022 property tax simulation requested from Woo Byung-tak, head of the Real Estate Team at Shinhan Bank WM Consulting Center, if the official price is frozen and the 95% fair market value ratio is applied, the property tax for Banpo Xi in Seocho-gu, Seoul, with an exclusive area of 84㎡, will be 13,622,520 KRW this year, a decrease of 2,903,760 KRW (17.6%) compared to last year. Acro River Park in Seocho-gu (84.97㎡) will be 14,714,640 KRW, and Jamsil Jugong 5 Complex in Songpa-gu (82.61㎡) will be 9,853,296 KRW, decreasing by 3,204,720 KRW (17.9%) and 968,688 KRW (8.9%) respectively. Raemian Oksu River Zen in Seongdong-gu, Seoul (84.81㎡) will be 4,400,448 KRW, 37,872 KRW (0.9%) less than the previous year.

On the other hand, for Mapo Raemian Prugio in Mapo-gu (84.5978㎡), the property tax this year will be 4,611,312 KRW, an increase of 239,767 KRW compared to 4,371,545 KRW last year. Raemian Crecity in Jeonnong-dong, Dongdaemun-gu (84.96㎡) and Godeok Raemian Hillstate in Gangdong-gu (84.74㎡) will also see increases of 441,334 KRW and 283,935 KRW respectively, with this year's property tax at 2,706,245 KRW and 3,282,000 KRW. However, the slight increase in property tax in some areas is lower than before the relief plan. The fair market value ratio applied this year is 60% for property tax and 100% for comprehensive real estate tax, but by revising the enforcement decree, property tax can be adjusted between 40% and 80% (for housing), and comprehensive real estate tax between 60% and 100%.

Team leader Woo said, "Because the relief amount is inevitably larger for complexes with high property tax, the gap in property tax relief between high-priced apartments in Gangnam and other areas is unavoidable," adding, "Simply applying last year's level will cause tax burdens to rise in some places, so adjustment of the fair market value ratio is necessary."

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