Yoo Kyung-jun: "In 5 Years, All 25 Autonomous Districts in Seoul Will Pay Comprehensive Real Estate Tax"

Yoo Kyung-joon, member of the People Power Party. [Image source=Yonhap News]

[Asia Economy Reporter Chunhee Lee] It is predicted that in five years, comprehensive real estate tax will be imposed on apartments with an exclusive area of 85㎡ or more in all autonomous districts within Seoul.

On the 25th, Yoo Kyung-jun, a member of the National Assembly's Planning and Finance Committee from the People Power Party, released the "2018~2030 Seoul City District-wise Apartment Holding Tax Change Analysis Report." This report estimates changes in the average holding tax (property tax + comprehensive real estate tax) by district for apartments of 85㎡, the 'national housing standard' in Seoul, based on ▲the current government's official price realization roadmap, ▲adjustments to the fair market value ratio, ▲and the average price fluctuation rate over the past five years.

According to the report, the current average holding tax burden for 85㎡ apartments in Seoul is about 1.82 million KRW. However, it is expected to increase to 8.97 million KRW by 2025 and reach 45.77 million KRW by 2030. These figures represent increases of 4.9 times and 25.1 times, respectively. By district, Seongdong-gu is expected to see an increase of 7.5 times by 2025 and 38.4 times by 2030.

Based on the current average apartment prices of 85㎡ units in each district of Seoul, only Gangnam-gu and Seocho-gu currently fall under the comprehensive real estate tax payment category. However, by 2025, apartments priced above the district average in all 25 autonomous districts of Seoul are expected to be subject to the comprehensive real estate tax. In particular, Gwangjin, Mapo, Seongdong, Yongsan, Dongjak, Songpa, Yangcheon, and Yeongdeungpo-gu are projected not only to be liable for the comprehensive real estate tax but also to have an annual total holding tax exceeding 10 million KRW. Representative Yoo pointed out that the comprehensive real estate tax, which was originally targeted at owners of high-priced homes, has effectively become a 'universal tax.'

Representative Yoo stated, "The Moon Jae-in administration claims that the real estate tax bomb targets a small number of wealthy individuals, but in reality, it is not an exaggeration to say that all Seoul citizens who own homes are subject to payment." He added, "Since this estimate only targets 85㎡ apartments, which are the national housing standard, it is hard to consider these figures exaggerated." He further noted, "Forced official price realization and increased tax burdens could instead drive up housing prices. Considering that this aspect was not factored in, the report's estimates may actually be conservative."

The report also includes results based on the assumption that the current government's real estate measures partially take effect, suppressing future real estate price increases to about 50% of the average growth rate over the past five years. Even if the government's measures are effective, Seoul's average holding tax is expected to increase by 2.6 times in 2025 and 7.2 times in 2030.

Representative Yoo said, "Forced adjustments to official prices by the government affect not only real estate holding taxes but also about 60 other taxes and quasi-taxes, including health insurance premiums." He added, "The burden felt by citizens will inevitably be much greater than this estimate, making tax resistance among Seoul citizens unavoidable."