Myeongdong Commercial Area Owners Must Pay Up to 560 Million KRW in Property Taxes

[Asia Economy Reporter Yoo In-ho] Property holding taxes on prime land in the Myeongdong and Chungmuro areas of Seoul will increase by up to 50% this year.

On the 12th, the Ministry of Land, Infrastructure and Transport calculated this year's holding taxes for the top 5 nationwide parcels with the highest official land prices and found that the average increase for these 5 locations is 50%. The holding tax is expected to surge this year from a minimum of 16.99 million KRW to as much as 155.76 million KRW.

These parcels have seen holding tax burdens increase as much as last year. Last year, official land prices mostly doubled, resulting in a holding tax shock. The government targeted high-priced land with large discrepancies from market prices to raise the official land price reflection rate (realization rate). In particular, by significantly raising official land prices only for high-priced land last year, Myeongdong and Chungmuro in Seoul were hit hard. The official land price for standard land in Myeongdong, considered the most expensive land nationwide, more than doubled uniformly, approaching 200 million KRW per 1㎡.

The holding tax for the Nature Republic site in Myeongdong, Jung-gu, Seoul, which has held the number one spot for nationwide land prices for 17 consecutive years, is expected to reach 209.56 million KRW (property tax 144.78 million KRW · comprehensive real estate tax 64.79 million KRW), a 50% (61.04 million KRW) increase from last year. However, this calculation assumes ownership of only this parcel and comprehensive real estate tax is calculated accordingly; urban area property tax is levied separately, so the actual holding tax may differ.

The holding tax for the Woori Bank site in Myeongdong, Seoul, ranked second nationwide in land price, is estimated at 559 million KRW (325.54 million KRW · 233.46 million KRW), a 50% increase of 155.76 million KRW from last year. This is the highest holding tax among the top 5 official land price parcels.

The holding tax for the Uniqlo store site in Myeongdong, Seoul, the third most expensive land, will increase by 112.88 million KRW (50%) from last year. This site must pay 385.72 million KRW (240.81 million KRW · 144.91 million KRW) in holding tax.

The Tony Moly site in Myeongdong, Seoul, ranked fourth nationwide in land price, will also see an increase of 18.66 million KRW in holding tax this year. The holding tax is expected to rise 50% from last year to 64.91 million KRW (53.72 million KRW · 11.19 million KRW).

The fifth-ranked Myeongdong VDL site is also expected to face a 50% (16.99 million KRW) increase in holding tax burden this year. The holding tax here is estimated at 58.04 million KRW (49.28 million KRW · 8.76 million KRW).

However, the Ministry of Land, Infrastructure and Transport expects that for the remaining 99.6% of land excluding these high-priced parcels, the official land price change rate is not significant, so the impact on tax burdens, health insurance premiums, and welfare eligibility will be minimal.