Government Eases Tax Burden for Single-Homeowners... 'Fair Market Value Ratio' Adjusted from 60% to 45%

Ministry of the Interior and Safety Revises Enforcement Decree of Local Tax Act... Plans to Complete Amendment Procedures by End of June

[Asia Economy Reporter Lim Cheol-young] The government has decided to lower the fair market value ratio from the current 60% to 45% as a measure to ease the tax burden on single-homeowners due to the rise in publicly announced property prices.

According to the Ministry of the Interior and Safety on the 16th, the government initially planned to amend the Local Tax Special Cases Restriction Act to apply the 2021 publicly announced price instead of the 2022 price as the tax base for property tax. However, considering recent legislative discussions in the National Assembly, it has decided to revise the Enforcement Decree of the Local Tax Act. This measure was taken because if the law's passage is delayed, the increase in publicly announced prices could be reflected in the tax burden, potentially raising it by up to 30%. Revising the enforcement decree was deemed unavoidable to send out the reduced tax bills in July.

With this measure, among the 19.1 million houses subject to property tax in 2021, 9.8 million houses (51.3%) are owned by single-homeowners, and it is expected that about 51% of all houses will receive tax burden reduction benefits this year, similar to last year. The fair market value ratio that restores the total tax burden borne by single-homeowners to the 2020 level is 45%.

The total tax burden for single-homeowners is expected to decrease by 766.6 billion KRW compared to maintaining the current 60%, lowering it to below the 2020 level before the sharp rise in publicly announced prices. The average property tax per house is 439,000 KRW if the current 60% is maintained, but it is expected to be reduced by 78,000 KRW (17.8%) to 361,000 KRW if lowered to 45%.

The Ministry of the Interior and Safety announced the draft amendment to the Enforcement Decree of the Local Tax Act for public comment on the same day and plans to complete the amendment process by the end of June. Half of the property tax on houses (first installment) will be imposed in July and can be paid from July 16 to August 1, while the remaining half (second installment) will be imposed in September and can be paid from September 16 to September 30.

Minister Lee Sang-min said, “We plan to reasonably improve the increased property tax burden caused by excessive rises in publicly announced prices over a short period according to tax principles,” adding, “We expect this measure to help stabilize housing for actual homeowners and low-income households.”

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