1 in 10 Houses Vacant... "Tax Burden if Neglected, Tax Benefits Should Be Given for Voluntary Demolition"

Korea Local Tax Research Institute Research Report
"Voluntary Inducement of Vacant House Maintenance Needed"

Photo by Asia Economy

Amid the crisis of population decline and regional extinction, the number of vacant houses nationwide is steadily increasing, prompting suggestions that voluntary vacant house maintenance should be encouraged through a combination of tax benefits and tax burdens.

On the 17th, the Korea Local Tax Research Institute published a research report titled "Improvement Measures for Property Tax System for Vacant House Maintenance." The report contains the idea that while providing local tax benefits to encourage vacant house owners to voluntarily demolish and utilize vacant houses, it is also necessary to impose reasonable additional tax burdens consistent with the purpose and principles of local tax items if voluntary maintenance is not carried out.

According to the Housing Census by Statistics Korea, the 1.511 million vacant houses in 2020 accounted for 8.2% of the total houses nationwide that year. Considering the rate of increase, it is expected to exceed 10% within a few years.

Vacant houses cause various social problems such as nearby slum deterioration, misuse as crime sites, building collapse, and fire accidents. When vacant houses are unauthorized, it becomes even more difficult to grasp the actual situation and manage them, raising concerns about significant damage.

The main reason vacant house owners currently refuse voluntary demolition is that under the Local Tax Act, the assessed value of buildings on vacant houses is not high, and demolishing the vacant house changes the property tax target from the house to the land, which actually increases taxes, making it more advantageous to leave the vacant house as is.

Although various policies are currently being implemented to curb the increase of vacant houses, there is no system under the current local tax laws that focuses on vacant houses to induce their management and demolition through tax benefits.

The report argued, "To encourage the demolition of old and poor-quality vacant houses, it is necessary to provide tax incentives such as property tax reductions on the land attached to the demolished vacant houses when owners voluntarily demolish them, and to increase tax burdens by expanding the application of the fire service local resource facility tax in cases of non-demolition." By providing a combination of tax benefits and burdens, the aim is to induce voluntary demolition and management by vacant house owners.

However, the report also stated, "Unauthorized vacant houses should not be treated the same as authorized vacant houses from a policy perspective, as institutional rationalization of unauthorized status could encourage illegal acts and raise fairness issues. Therefore, unauthorized vacant houses should not be eligible for tax benefits but should be subject to increased tax burdens." Specifically, unauthorized vacant houses that are not demolished within 60 days from the date they become vacant without justifiable reasons will be subject to a 50% flexible tax rate applied to the standard rate of the fire service local resource facility tax.

Heo Won-je, the research fellow in charge of this study, said, "Unlike general houses, vacant houses cause complex problems that can lead to more severe levels and scopes of safety accidents such as fires and collapses, requiring higher administrative costs for fire services. Therefore, the additional imposition of the fire service local resource facility tax complies with taxation principles."

He added, "At the same time, since many vacant house owners are elderly or low-income individuals, there is a need to avoid abrupt tax changes that could cause excessive tax burdens and taxpayer resistance."

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