[2020 Comprehensive Real Estate Tax] "Be Sure to Pay by the 15th of Next Month"... 13 Useful Tips

Apartment buildings in downtown Seoul (Photo by Yonhap News)

[Asia Economy Reporter Kwangho Lee] This year's comprehensive real estate tax must be paid by December 15.

The National Tax Service announced on the 25th that tax notices and payment guides have been sent to taxpayers liable for the 2020 comprehensive real estate tax.

The comprehensive real estate tax is a tax aimed at ensuring fairness in the tax burden on real estate ownership and balanced development of local finances.

The entire revenue from the comprehensive real estate tax is transferred to local governments as real estate grant tax.

This year, 744,000 taxpayers received tax notices, with a total tax amount of 4.2687 trillion KRW. Compared to the previous year, the number of taxpayers increased by 149,000 (25.0%), and the tax amount increased by 921.6 billion KRW (27.5%).

Considering that the final tax amount decreases by about 10% (based on 2019) due to applications for exclusion after notification, the final tax amount is estimated to be about 3.8 trillion KRW.

Below are questions and answers related to the notification and payment of the comprehensive real estate tax.

* Which comprehensive real estate tax-related services on Hometax require access via a public certificate?

- Among the comprehensive real estate tax-related services provided on Hometax, those requiring a public certificate include comprehensive real estate tax payment, tax on taxable properties for comprehensive real estate tax, and comprehensive real estate tax filing (using pre-filled forms).

* How is the comprehensive real estate tax assessed?

- First, property tax is imposed by the local city, county, or district office where the real estate is located on owners of houses or land. Second, if the combined value of taxable properties nationwide by type (houses, comprehensive or separately aggregated land) exceeds the deduction amount for each type, the comprehensive real estate tax is determined and notified.

* What is the publicly announced price used as the basis for comprehensive real estate tax assessment?

- It refers to the price publicly announced on January 1 each year by the Minister of Land, Infrastructure and Transport and the mayors, county governors, or district heads according to the "Real Estate Price Public Announcement Act." The Minister of Land, Infrastructure and Transport announces prices for apartment complexes and standard single-family houses and standard land, while other single-family houses and land prices are announced by the local city, county, or district office where the real estate is located. Public prices for houses (apartments) are announced in April, and for land in May. These prices can be checked on the websites of the Ministry of Land, Infrastructure and Transport or the local city, county, or district office.

* What is a one-household one-house owner under the comprehensive real estate tax law?

- A one-household one-house owner under the comprehensive real estate tax law refers to a resident under the Income Tax Act who owns only one house subject to property tax within the household, with only one member owning that single house.

* What is the deduction amount when one house is co-owned with a spouse or family?

- Since a one-household one-house owner means that only one member of the household solely owns one house subject to property tax, if a spouse or household member co-owns one house, it does not qualify as one-household one-house owner. In such cases, each co-owner receives a deduction of 600 million KRW.

* How is the number of houses counted when applying tax rates?

- The comprehensive real estate tax is imposed only when the preceding tax, property tax, is imposed on houses. Therefore, the number of houses is calculated based on the property tax assessment type. When applying the comprehensive real estate tax rate, the number of houses is the total number of property tax-assessed houses owned nationwide by the taxpayer. Even if only a partial share of a house is owned, it is counted as one house for tax rate application. However, rental houses excluded from aggregation are not counted when calculating the number of houses for tax rate application.

* Are houses inherited with a certain share included in the house count?

- When a house is inherited and co-owned, if the ownership share is 20% or less and the corresponding public price of the share is 300 million KRW or less, it is excluded from the house count when applying tax rates. However, it is included in the house count when determining one-household one-house status, and the public price of the inherited house receiving special treatment is included in the tax base. If there are multiple co-inherited houses, each is judged separately, and all inherited houses meeting the conditions are excluded from the house count.

* What is the basis for determining whether an area is a regulated area?

- When applying the comprehensive real estate tax rate, the determination of whether the property is located in a regulated area is based on June 1, the tax base date each year.

* How can one check the list of taxable houses and land?

- Taxable properties can be checked and detailed lists downloaded using the "Taxable Property Inquiry" service on Hometax or Sontax. Taxpayers who have difficulty using Hometax can receive the property list from their local tax office after identity verification.

* Under what circumstances can one file a comprehensive real estate tax return?

- If the notified content differs from the facts or if the taxpayer wishes to file a return, they can file and pay regardless of the tax notice, and the initially notified tax amount will be canceled. If there is an objection to the notice, an appeal such as objection or adjudication can be filed within 90 days from the date of receipt of the notice.

* What if one fails to file an exclusion application within the exclusion filing period?

- If a taxpayer owning real estate meeting exclusion requirements fails to file an exclusion application during the exclusion filing period (September 16?30), they can still apply for exclusion during the comprehensive real estate tax payment period. In this case, the taxpayer must submit the application regardless of the notice and pay the tax amount at financial institutions. If the exclusion application was incorrectly filed initially, it can be corrected and refiled during the payment period.

* What is the penalty for late payment after December 15?

- If payment is delayed past the deadline, a 3% late payment surcharge is imposed. If the tax amount is 1 million KRW or more, an additional 0.025% late payment surcharge per day (for up to 5 years) is added after the due date.

* What are the disadvantages of incorrectly reporting the comprehensive real estate tax amount?

- If a taxpayer chooses to file a return instead of paying based on the notice and reports less than the correct tax amount, an underreporting penalty of 10% (40% for intentional underreporting) of the underreported amount is imposed. Additionally, a late payment surcharge of 0.025% per day on the underreported amount is charged from the day after the due date until payment.