"Lower the Cap on Property Holding Tax," Seoul City Proposes to Transition Committee

by Kim Dongpyo

by Kim Minyoung

Published 20 Apr.2022 13:26(KST)

View of downtown Seoul from Namsan, Seoul on the 11th. Photo by Mun Ho-nam munonam@

The Seoul Metropolitan Government has officially proposed to the Presidential Transition Committee a plan to reduce the property tax burden on actual homeowners, along with the idea of integrating the comprehensive real estate holding tax with the property tax.

On the 20th, Seoul announced that it had delivered a reform plan for the holding tax system prepared by a tax reform advisory group composed of 10 external experts to the transition committee. The city launched the advisory group in February with the goal of easing the holding tax burden in a way that citizens can feel, and completed this reform plan through a total of four meetings. The intention is to normalize the holding tax system to alleviate excessive tax burdens on actual homeowners with one house and retired elderly people without the ability to pay taxes.

First, the city proposed maintaining the current four-tier tax rate system for residential property tax but adjusting the highest tax rate application range from a publicly announced price of 500 million KRW to 900 million KRW. It also suggested lowering the current uniform tax burden cap rate of 130% applied to houses with a publicly announced price exceeding 600 million KRW to 110% for the 600 million to 900 million KRW range and 115% for the range exceeding 900 million KRW. For actual residents and retired elderly, the city proposed a maximum 30% reduction in property tax with a 300,000 KRW cap to prevent the regressive nature of tax relief where owners of high-priced houses receive greater tax reductions.

The city also presented measures to reduce the comprehensive real estate holding tax burden, such as excluding multi-homeowners of apartments from the aggregation of the comprehensive real estate tax. It proposed lowering the current maximum 300% tax burden cap rate for the residential portion of the comprehensive real estate tax to 150%. This plan aligns with President-elect Yoon Suk-yeol’s campaign pledge, focusing on easing the tax burden. However, the part about easing capital gains tax was omitted from the city’s proposals. This is interpreted as Seoul, where there are many high-priced houses, judging that easing the holding tax burden is more urgent.

Additionally, the city suggested a long-term plan to integrate the comprehensive real estate holding tax with the property tax. This involves abolishing the comprehensive real estate tax, converting it into a local tax, and unifying it with the property tax. However, to maintain the purpose of the comprehensive real estate tax as ‘regional balanced development,’ the city proposed maintaining the current allocation criteria for local grants.

Seoul Mayor Oh Se-hoon said, "Since the transition committee has also launched a ‘Real Estate Tax TF’ and announced the goal of reforming real estate taxes according to tax principles, I hope that the tax reform plan prepared by Seoul can serve as a catalyst for normalizing the holding tax system."