[Beginner's Guide] Buying a House Is Tight Enough, but Acquisition Tax Too? ... How Much Do I Have to Pay?

Non-homeowners and single homeowners face 1-3%
considering agricultural and education taxes

Owners of two or more homes and corporations face 8-12% surtax
homes over 900 million KRW can be taxed up to 13.4%

However, 'temporary two-homeowners' are exempt from surtax
residential officetels are also counted as homes

[Asia Economy Reporter Lee Chun-hee] When you become a real estate reporter, you often get unexpected KakaoTalk messages from friends. "How do I apply for a housing subscription?" "What is first priority?" For the 2030 'Burin-i (real estate + beginner)' who only have subscription savings accounts created by their parents when they were young, I am going to create a guide.

For Burin-i who have decided to buy a house and are diligently saving funds, did you know that just saving for the house price is not enough? Just like when buying a car, you have to consider acquisition and registration taxes in addition to the car price, houses also come with acquisition tax.

Unlike cars, acquisition tax can be quite costly, so you need to check it carefully. Since the acquisition tax rate has undergone two major changes this year, many Burin-i find it difficult to calculate acquisition tax. Today, we will take some time to learn about acquisition tax.

If you are a non-homeowner or own one house? ... 1~3% + Agricultural and Fishery Special Tax, Education Tax

If you are a non-homeowner or own one house, or if you own two houses in a non-regulated area and the house price you want to acquire is below 600 million KRW or exceeds 900 million KRW, you can calculate the acquisition tax rate without much difficulty. Houses priced below 600 million KRW are uniformly taxed at 1.0%, and houses exceeding 900 million KRW are taxed at 3% acquisition tax.

However, you should not forget that additional Agricultural and Fishery Special Tax and Local Education Tax are also imposed. The Agricultural and Fishery Special Tax rate is uniformly 0.2% regardless of price and is not imposed when purchasing a house of 'national housing size' 85㎡ (exclusive area) or less. The Local Education Tax is levied at about 10% of the acquisition tax rate.

For example, if you purchase a 100㎡ house priced at 600 million KRW, you pay acquisition tax of 6 million KRW (1%), Agricultural and Fishery Special Tax of 1.2 million KRW (0.2%), and Local Education Tax of 600,000 KRW (0.1%), totaling 7.8 million KRW. If you buy a house of the same size priced at 1 billion KRW, you pay acquisition tax of 30 million KRW (3%), Agricultural and Fishery Special Tax of 2 million KRW (0.2%), and Local Education Tax of 3 million KRW (0.3%), totaling 35 million KRW.

However, if the price is over 600 million KRW but less than or equal to 900 million KRW, the calculation becomes complicated. Previously, acquisition tax was uniformly imposed at 2% in this range. But many complained about the tax burden increasing sharply when reporting a transaction price lower than actual or when adding options considered necessary at the time of contracting a newly built house.

For example, if you contract an 84㎡ house priced at 600 million KRW with no options, the total tax is 6.6 million KRW (1.1%). However, adding options worth just 10 million KRW doubles the tax to 13.42 million KRW (2.2%). Because of this, a new Local Tax Act that subdivides the tax rate in this range has been implemented from this year.

Changes in Acquisition Tax Rates for the 600 Million to 900 Million KRW Bracket Due to Local Tax Act Amendments (Provided by the Ministry of the Interior and Safety)

The new Local Tax Act sets the acquisition tax rate calculation method for the 600 million KRW to 900 million KRW range as '(acquisition price × 2/3 - 300 million KRW) / 100 million KRW %'. For a 700 million KRW house, the rate is (700 million × 2/3) - 300 million = 1.67%, and for 800 million KRW, it is 2.33%, increasing by 0.33 percentage points every 50 million KRW.

Using the previous example, even if you add 10 million KRW in options to a 600 million KRW base price, the tax payable increases by only 580,000 KRW to 7.18 million KRW, so if you buy a house priced below 750 million KRW, the acquisition tax burden is significantly reduced.

If you are a multi-homeowner? ... Acquisition tax soaring up to 12%, tax alone is 100 million KRW for a 760 million KRW house

If you already own a house and plan to buy more for rental business or other purposes, acquisition tax calculation becomes more complicated. According to the July 10 real estate measures, the newly implemented Local Tax Act from the 12th has decided to significantly increase acquisition tax rates for multi-homeowners.

The new Local Tax Act applies the existing 1~3% acquisition tax rate to non-homeowners or one-house owners (and two-house owners in non-regulated areas). However, two-house owners in regulated areas (and three-house owners in non-regulated areas) are uniformly taxed at 8% acquisition tax regardless of house price. Those owning three or more houses (four or more in non-regulated areas) or corporations are further taxed at a whopping 12% acquisition tax rate.

When such surcharges apply, the Agricultural and Fishery Special Tax remains unchanged, but the Local Education Tax increases proportionally at about 10% of the acquisition tax rate.

Even if you buy a 9 billion KRW house of 85㎡ size, the total acquisition tax rate varies greatly from 3.3% to 13.4% depending on the number of houses you currently own, a difference of 10.1 percentage points. In actual tax amounts, a non-homeowner pays only 29.7 million KRW, but someone owning four houses or a corporation pays acquisition tax alone of 118.8 million KRW.

'No worries for genuine buyers... 'Temporary two-homeowners' exempt from surcharge

However, the new Local Tax Act exempts 'temporary two-homeowners' from acquisition tax surcharges even if they own two houses. If you acquire another house due to moving, study, or employment while owning a house, move-in rights, or officetel, and dispose of the existing house within 3 years (1 year in regulated areas), you are exempted. Note that for move-in or pre-sale rights, the 'temporary two-homeowner period' is calculated from the date of acquiring those rights.

Another point to note when counting multiple houses is officetels. Many people think 'officetels are not included as houses.' However, the new Local Tax Act has revised to include residential officetels subject to housing property tax in the count for acquisition tax surcharges. Be sure to keep this in mind. However, contracts signed before the 12th or pre-sale rights for officetels are not included in the house count.

Finally, if the house you currently own has a publicly announced price of 100 million KRW or less, it is not included in the house count for acquisition tax surcharges. However, if the area is designated as a redevelopment zone, all houses are subject to surcharges regardless of the publicly announced price.