"Not a Tax but a Fine"... Public Outrage Boils Over the 종부세 Bombshell

Predicted 종부세 Bomb... Surprised When Actually Received
Next Year and the Year After, Holding Tax Burden Expected to Increase
Will Listings Flood the Market... Future Housing Price Trends Are Key

[Asia Economy Reporter Moon Jiwon] "It has more than doubled compared to last year. This is not a tax, but a fine. Shouldn't we start a tax resistance movement?"

As this year's comprehensive real estate tax (종합부동산세, Jonghap Budongsanse) bills were sent out, complaints have been pouring in, especially from those required to pay. Since the government has taken several measures to strengthen the tax burden over time, this 'Jongbu Tax bomb' was somewhat anticipated. However, homeowners who actually saw the significantly increased payment amounts were visibly taken aback.

According to the real estate industry on the 24th, homeowners who received the Jongbu Tax bills are strongly protesting the sharply increased payment amounts compared to last year. Posts expressing dissatisfaction, even mentioning 'tax resistance,' have been appearing daily on online real estate communities.

Mr. A, who owns two houses in Seoul, said, "The Jongbu Tax doubled to about 10 million won," adding, "As a self-employed person, I haven't been able to run my business properly due to COVID-19, and it seems this year will just be about paying taxes."

Mr. B, who owns two properties worth around 1 billion won each in Seoul and Gyeonggi Province and another worth about 700 million won, said, "My total holding tax this year is about 9 million won," adding, "After experiencing this tax bomb, I wonder if owning a house is a crime." With this year's increase in publicly announced property prices and the adjustment of the fair market value ratio (a discount rate concept) from 85% to 90%, the number of new Jongbu Tax payers has also significantly increased.

For example, in Goduk-dong, Gangdong-gu, Seoul, the Goduk Raemian Hillstate 84㎡ (exclusive area) saw its publicly announced price rise to 945 million won this year, making it subject to Jongbu Tax for the first time. This complex was reportedly charged 101,088 won in Jongbu Tax and 2,759,400 won in property tax.

The problem is that this Jongbu Tax burden will increase even more from next year. The highest Jongbu Tax rate for owners of high-priced homes will rise from 3.2% to 6%, and publicly announced property prices will also increase sharply. Mr. C, who owns a house in Yongsan-gu, Seoul, said, "I can't sleep worrying about next year's Jongbu Tax," adding, "The government is labeling registered rental business owners as speculators and canceling their tax benefits, throwing a tax bomb at us. I don't know what to do."

On the Blue House's public petition board, posts have even appeared claiming that imposing Jongbu Tax on retirees and single-homeowners is unfair. One petitioner said, "Do I have to work until I die just to pay Jongbu Tax after retirement?" and appealed, "We pay acquisition tax and property tax, and capital gains tax when selling, but the Jongbu Tax burden is too heavy."

However, experts predict that despite the sharp increase in tax burdens, the appearance of properties for sale will be limited. Ahn Myung-sook, head of the Real Estate Investment Support Center at Woori Bank, explained, "If the trend of falling sale prices continues, many properties might come onto the market around March next year, but if not, and if jeonse (long-term lease) prices rise or expectations for reconstruction increase during the Seoul mayoral by-election next year, many people will hold on."