"Freezing the Official Price Realization Rate Gives Greater Benefits to High-Priced Properties"

PSPD Analyzes Assets of Lawmakers and Senior Officials Responsible for Official Property Prices
"Kim Eunhye, Kim Yongbeom, and Goo Yooncheol See Holding Taxes Reduced by 20–30%"

There have been criticisms that, due to the freeze on the official price realization rate for several years, those who own more expensive homes are benefiting more. In particular, an analysis based on the assets of high-ranking officials who are directly involved in the National Assembly or related policymaking showed that the tax reduction effect reached double digits.

According to a recent report on the official price realization rate published by the People's Solidarity for Participatory Democracy (PSPD), the officially announced price of the apartment complex and building owned by Assemblywoman Kim Eun-hye, a member of the National Assembly's Land, Infrastructure and Transport Committee from the People Power Party, is approximately 20.8 billion won. Considering that the comprehensive real estate tax targets land and housing rather than buildings, and that the property tax on buildings is levied based on the market standard price rather than the officially announced price, the tax base was estimated at 18.6 billion won (1.33 billion won for the apartment complex and 17.28 billion won for the building's land).

The PSPD estimated that the property holding taxes (property tax and comprehensive real estate tax) Kim would pay would amount to around 10.48 million won. If the plan to increase the official price realization rate, which was finalized during the Moon Jae-in administration, had been fully implemented, she would have paid about 12.994 million won. However, due to the freeze on the realization rate, she received a tax reduction of about 23%, which amounts to nearly 30 million won.

An apartment complex in Gangnam-gu, Seoul. Photo by Yonhap News Agency

As for Kim Yongbeom, the policy chief at the Presidential Office, it was estimated that his property holding tax would have been about 3.92 million won if the realization rate had been implemented as planned. Compared to last year’s estimated tax payment of 2.84 million won, this is about 27% lower. The price of the Gangnam apartment he reported last year was 1.56786 billion won. If the original realization rate plan had been applied, the price would have been about 1.87393 billion won, but the tax was calculated based on a price more than 300 million won lower. The actual transaction price of this apartment last year exceeded 2.8 billion won.

Deputy Prime Minister for Economic Affairs and Minister of Economy and Finance Koo Yoon-cheol reported the value of his Gangnam apartment as 1.5 billion won. As it is a newly constructed apartment after reconstruction and not yet registered, there is no officially announced price, but sale rights for apartments of the same size have traded for about 4.4 billion won. If the holding tax is calculated based on the reported amount of 1.5 billion won, it is estimated to be around 3.59 million won. If the realization rate had been applied as planned, the holding tax would have been about 5.54 million won, indicating a tax reduction effect of 35% due to the freeze.

PSPD also estimated that even those who do not own high-priced homes could see a certain level of tax reduction. Minister of the Interior and Safety Yoon Ho-jung owns an apartment in Guri as well as land and commercial properties in Seoul and Gyeonggi Province. The property tax reduction estimated due to the official price realization rate freeze was about 580,000 won. Assemblyman Kwon Young-jin of the People Power Party, who owns an apartment in Nowon-gu, Seoul, was estimated to have received a property tax reduction of about 160,000 won.

In 2024, officials from the Citizens' Coalition for Economic Justice in Jongno-gu, Seoul, held a press conference to announce the analysis results of Seoul apartment prices, publicly announced prices, and property taxes. Photo by Jin-Hyeong Kang aymsdream@

The official price realization rate plan was a policy introduced in 2020 during the Moon Jae-in administration. In response to criticism that real estate official prices, which stood at 50–60% of market values, were far removed from reality, the plan proposed to gradually increase the realization rate to more accurately reflect market prices. The blueprint at the time aimed for the official price of apartment complexes and other multi-unit housing to reach 90% of market value by 2030, and for standard land (reference land) to reach 90% by 2028. The plan called for the realization rate to rise by 1 to 3 percentage points each year.

However, as actual prices rose and the realization rate increased in tandem, the tax burden grew rapidly, leading the Yoon Suk-yeol administration to revert to 2020 levels. The Lee Jae-myung administration has also maintained the realization rate at that level. The government is planning to review and revise the official price calculation method and system, with plans to announce changes around the end of this year.

The PSPD pointed out that key policymakers, including members of the National Assembly and senior government officials with authority and responsibility over the real estate official price system, are directly benefiting from the freeze on the realization rate. The organization stated, "The tax reduction effect from freezing the official price realization rate was greater for high-priced homes, especially for those who owned a single valuable property," and argued, "The fairness of the official prices themselves is being undermined, as different standards are applied depending on the region, property type, and price range."

The report continued, "The main reason official prices are kept lower than market prices is that they are used in various administrative areas, such as taxation and welfare, and policy considerations are reflected from the calculation stage." It added, "Official prices should be calculated and published accurately based on market value, and policy adjustments, such as tax burdens or welfare eligibility criteria, should be designed separately at the stage where official prices are applied."

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