Kim Heon-dong "SH Property Tax Increased 1.8 Times... Please Exempt Considering the Purpose"

Kim Heon-dong, President of SH Corporation. / Photo by Dongju Yoon doso7@

[Asia Economy Reporter Kim Hyemin] Kim Heondong, president of Seoul Housing and Communities Corporation (SH Corporation), has requested an exemption from holding taxes imposed on public rental housing.

On the morning of the 23rd, Kim held a press briefing at the Seoul headquarters and stated, "It is unreasonable to apply the same holding tax rates to public rental housing for vulnerable housing groups as to general multi-homeowners," making this request.

The holding taxes imposed on public rental housing owned by SH Corporation, including property tax and comprehensive real estate tax, amounted to 70.5 billion KRW last year. It was 23.9 billion KRW in 2018 and 39.5 billion KRW in 2020, but surged 1.8 times in one year. Property tax increased 1.2 times to 32 billion KRW, and comprehensive real estate tax increased 2.9 times to 38.5 billion KRW. Rental income was 136.9 billion KRW, meaning half of the income was spent on holding taxes.

Property tax on public rental housing was exempted as a local government corporation’s purpose business until before 2011. However, after the enactment of the Local Tax Special Cases Act, the local tax reduction rate was gradually reduced, increasing the burden accordingly. Additionally, SH Corporation explained that the comprehensive real estate tax burden sharply increased due to the significant rise in the highest tax rate for multi-homeowners following last year’s amendment to the Comprehensive Real Estate Tax Act and the increase in rental housing exceeding the exclusion criteria due to rising housing prices.

Kim said, "If the rent for public rental housing is set at the same level as market rental housing, about 1.6 trillion KRW in income would be generated, but actual rental income is about 140 billion KRW," and argued, "It is unreasonable to impose the same heavy holding taxes on public housing operators who are regulated in exercising property rights, such as rent setting, as on general multi-homeowners."

In fact, advanced countries such as the United States, Canada, and France exempt holding taxes on public rental housing for long periods as a form of support. New York exempts for 50 to 60 years, and Toronto exempts property tax on the condition that the exemption amount is used for maintenance and repair of rental housing.

SH Corporation plans to actively propose holding tax exemptions to the Ministry of Economy and Finance, the Ministry of the Interior and Safety, and the National Assembly in the future.

Kim especially emphasized, "Imposing punitive comprehensive real estate tax on public rental housing that is not for speculative purposes does not align with the policy objectives of the law," and stated, "Public rental housing should be unconditionally excluded from the comprehensive real estate tax aggregation." He also requested that property tax be amended in the Local Tax Special Cases Act to exempt property tax for a long period regardless of housing type, area, or ownership entity, considering the need to secure resources for public rental housing and its contribution to housing welfare.

He added, "Improving the system to exempt holding taxes on public rental housing is necessary so that more vulnerable housing groups can live in quality public rental housing."

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