Next Year, Office-tel Standard Market Price Rises 4.00% and Commercial Property 2.89%... "Capital Gains Tax Burden Increases"

National Tax Service Announces 2021 Standard Market Prices for Officetels and Commercial Buildings
Top Officetel: Seoul's 'The Rivers Cheongdam' at 10,354,000 KRW per Square Meter
Top Commercial Building: Seoul's 'Jamsil Jugong 5 Complex Shopping Center' at 25,533,000 KRW per Square Meter

[Asia Economy Reporter Kwangho Lee] Following housing, the standard market prices for officetels and commercial buildings (shops) will also rise. Inheritance and gift taxes as well as capital gains taxes linked to the standard market prices are expected to increase consecutively.

On the 30th, the National Tax Service announced the '2021 Standard Market Prices for Officetels and Commercial Buildings (Shops)'. According to the announcement, the average standard market price per square meter as of January 1 next year will increase by 4.00% for officetels and 2.89% for shops compared to this year. The standard market prices will apply to inheritance, gift, and transfer cases occurring on or after January 1, 2021.

For officetels, the standard market prices rose by region as follows: Seoul (5.86%), Daejeon (3.62%), Gyeonggi (3.20%), Incheon (1.73%), Busan (1.40%), and Gwangju (1.01%). For shops, the largest increases were in Seoul (3.77%), Incheon (2.99%), Daegu (2.82%), and Gyeonggi (2.39%). Sejong saw a decrease in standard market prices for officetels and shops by 1.18% and 0.52%, respectively, compared to the previous year.

The nationwide top 5 officetel standard market prices were: 'The Rivers Cheongdam' in Cheongdam-dong, Gangnam-gu, Seoul (KRW 10,354,000 per ㎡), 'Lotte World Tower' in Sincheon-dong, Songpa-gu, Seoul (KRW 8,759,000 per ㎡), 'Banpo Radiant Signature' in Bangbae-dong, Seocho-gu, Seoul (KRW 7,331,000 per ㎡), 'J Tower' in Jayang-dong, Gwangjin-gu, Seoul (KRW 7,130,000 per ㎡), and 'Baeksan Officetel' in Seongsu-dong, Seongdong-gu, Seoul (KRW 7,012,000 per ㎡).

The top shops were: 'Jamsil Jugong 5 Complex Comprehensive Shopping Center' in Jamsil-dong, Songpa-gu, Seoul (KRW 25,533,000 per ㎡), 'Cheongpyeonghwa Market' in Sindang-dong, Jung-gu, Seoul (KRW 24,467,000 per ㎡), 'Dongdaemun Comprehensive Shopping Center D Building' in Jongno 6-ga, Jongno-gu, Seoul (KRW 20,415,000 per ㎡), 'Banpo Bon-dong Shopping Center J Building' in Banpo-dong, Seocho-gu, Seoul (KRW 17,515,000 per ㎡), and 'Dongdaemun Comprehensive Shopping Center B Building' in Jongno 6-ga, Jongno-gu, Seoul (KRW 16,833,000 per ㎡).

On the same day, the National Tax Service also announced the method for calculating the standard market prices of general buildings excluding officetels and shops. The building standard market price is calculated by multiplying the 'amount per ㎡' by the 'area of the building subject to evaluation'. The amount per ㎡ is determined by multiplying the building construction price standard amount, structure index, usage index, location index, remaining value rate by elapsed years, and individual characteristic adjustment rate. The National Tax Service slightly adjusted the standard market prices by raising the building construction price standard amount to KRW 740,000 per ㎡ next year, an increase of KRW 10,000 from this year.

The standard market price is used when calculating capital gains tax if the actual transaction price at acquisition cannot be confirmed, or when the market price of inherited or gifted property at the start date of inheritance or gift is unknown. Local taxes such as acquisition tax and property tax, as well as comprehensive real estate holding tax, apply the standard market price set by the Ministry of the Interior and Safety, and are therefore unrelated to the National Tax Service's announced standard market prices.

From the 31st, the National Tax Service allows viewing of prices before the standard market price announcement. Viewing can be done via the National Tax Service Hometax website and mobile Hometax (Sontax). If there is an objection to the standard market price, opinions can be submitted online or by downloading a form and submitting it to the relevant tax office. Opinion submissions are accepted from January 4 to February 2 next year. Submitted opinions will be reviewed and individually responded to by February 26.