Up to 90% of Real Estate Official Prices
Tax Resistance and Concerns Over Imbalances by Property Type and Price
[Asia Economy Reporter Moon Jiwon] The Ministry of Land, Infrastructure and Transport (MOLIT) has expressed its position to "strive to enhance fairness and balance" in response to concerns that raising the official property price realization rate without proper preparation could lead to side effects such as price imbalances by housing type and tax resistance.
On the 29th, MOLIT explained, "We are currently establishing a plan to realize official property prices in accordance with the Act on Public Announcement of Real Estate Prices to improve the fairness and balance of official real estate prices and to ensure that the official prices reflect the appropriate value of real estate."
Earlier, on the 27th, MOLIT held a public hearing hosted by the Korea Research Institute for Human Settlements to establish a plan for realizing official property prices and revealed the direction for increasing official property prices. The ruling party and government are expected to propose a plan to set the realization rate of official property prices for all real estate at 90%.
According to this plan, the realization rate of official prices for high-priced multi-family housing over 1.5 billion KRW will rise to 90% within five years, those between 900 million KRW and less than 1.5 billion KRW will reach 90% by 2027, and apartments under 900 million KRW will achieve 90% by 2030.
Since official prices are used as the basis for various taxes such as property tax, the market has raised concerns that raising the realization rate in this way will excessively increase the tax burden not only on multi-homeowners and owners of high-priced homes but also on ordinary citizens.
There are also concerns that the government’s setting of different realization periods by real estate type and price range could cause fairness issues between high-priced and low-priced homes, as well as between multi-family and single-family homes.
The government has not properly disclosed the criteria for setting official prices, raising concerns that incorrect official price calculations could worsen tax imbalances.
In response, MOLIT explained, "The criteria for calculating official prices are established by MOLIT ordinances according to real estate type and are publicly available for anyone to see," adding, "They are calculated according to the criteria for each type."
Furthermore, MOLIT emphasized, "To improve the accuracy of official price surveys and calculations, we are working to further objectify survey standards, improve the price calculation system, and strengthen verification and review procedures."
MOLIT also plans to expand the disclosure of data related to official price calculations.
MOLIT stated, "This year, we have piloted the disclosure of basic calculation data for real estate located in Sejong City," and added, "According to the revised Real Estate Public Announcement Act, we plan to expand the scope of disclosure nationwide starting next year."
Regarding the application of different realization plans by real estate type and price range, MOLIT explained, "This was done considering the need to reasonably set realization timing due to the large variation in realization rates for mid- to low-priced housing."
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