The 'Notice' for Property Tax Doubled Compared to Last Year Has Arrived

Mr. A in Seocho-gu with a 114㎡ apartment, tax payment increased from 1.51 million KRW to 2.91 million KRW
Comprehensive real estate tax bills sent from today... Expected to exceed record high

[Image source=Yonhap News]

[Asia Economy Reporter Kwangho Lee] Mr. A, who lives in Jamwon-dong, Seocho-gu, Seoul, in Raemian Sinbanpo Palace (exclusive area 114㎡), calculated his estimated comprehensive real estate tax (종합부동산세) for this year through the KB Real Estate application and confirmed that the tax he has to pay is 2.91 million KRW. This amount has surged 92% compared to one year ago (1.51 million KRW). Including the property tax (5.6 million KRW) already paid, the total holding tax for this year amounts to 8.57 million KRW, a 46% increase from last year's 5.87 million KRW. As an ordinary office worker, Mr. A feels overwhelmed about how to manage the increasing tax burden going forward.

The National Tax Service will send out this year’s comprehensive real estate tax notices on the 23rd and 24th. Taxpayers must pay the tax between the 1st and 15th of next month. Along with sending the notices, the National Tax Service plans to provide information on its Hometax website so individuals can check their personal comprehensive real estate tax amounts.

Owners who have already checked their estimated comprehensive real estate tax through real estate apps are already distressed by the skyrocketing taxes. Mr. B, residing in Yeouido Kumho Richensia (exclusive area 167㎡) in Seoul, found that his comprehensive real estate tax this year is 900,000 KRW, a 176% increase from one year ago (320,000 KRW). Including property tax (3.79 million KRW), the total holding tax increase rate reaches 39%. For multi-homeowners, many cases have been identified where the comprehensive real estate tax to be paid easily exceeds 10 million KRW.

The comprehensive real estate tax is levied by aggregating an individual’s nationwide housing and land holdings and taxing the amount exceeding a certain official price threshold. For housing, the tax is imposed on the portion exceeding 600 million KRW (900 million KRW for single-home households) based on the official price as of June 1 each year. Although there is no change in the tax rate this year, the tax burden is expected to increase significantly due to the sharp rise in real estate prices, the reflection rate of official prices to market prices, and the increase in the fair market value ratio. Last year, the number of comprehensive real estate tax payers was 595,000, and the tax amount was 3.3471 trillion KRW, marking an all-time high. This year, with the rise in official prices and the fair market value ratio increasing from 85% to 90%, the tax amount is expected to exceed 3.5 trillion KRW.

The comprehensive real estate tax burden is expected to grow even more next year due to tax rate hikes. According to the amendment to the comprehensive real estate tax law passed by the National Assembly in August, the tax rate for multi-homeowners will increase up to a maximum of 6.0%. Despite widespread outcries over the increasingly heavy tax burden, the government maintains its stance to strengthen real estate taxation. Prime Minister Chung Sye-kyun stated at the National Assembly Budget and Accounts Special Committee on the 4th, "Holding taxes must be raised." He also emphasized, "There are long-term residence and senior citizen exemptions for retirees. The burden is not heavy."

According to the government’s previously announced 'Real Estate Official Price Realization Plan,' if official prices reach 90% of market prices by 2030, the increase in housing holding tax is expected to exceed 4.6 trillion KRW. A government official said, "Both the number of comprehensive real estate tax payers and the amount this year are expected to break all previous records," adding, "Next year, with the application of tax rate hikes, the increase will be even more significant."