Every Year, the 'Top 2%' Subject to Comprehensive Real Estate Tax Changes as the 'Standard Amount' Varies...Check Eligibility Every June

[Sejong=Asia Economy Reporter Son Seonhee] The Democratic Party of Korea has finalized its party stance to set the comprehensive real estate tax (종부세, Comprehensive Real Estate Holding Tax) threshold at the "top 2% of official property prices." Since the official property prices change annually, the threshold corresponding to the "top 2%" also varies each year, so taxpayers can only know whether they are subject to the 종부세 tax after June 1, when the government announces and finalizes the tax threshold.

According to the government and the Democratic Party of Korea on the 20th, with the 종부세 party stance decided as such, the 대상 (tax subjects) for 종부세 can be known around June 1 every year. The government discloses the official property prices for apartment complexes in March each year and finalizes the official prices from April after hearing opinions from owners and local governments.

The method ranks the total official property prices of nationwide houses combined per individual from 0 to 100%, then cuts off the threshold at the top 2%. One household with one house within this threshold is excluded from the 종부세 tax 대상.

Since the 종부세 tax 기준일 (tax base date) of June 1 has already passed this year, once the related law is amended, it is expected that the amount corresponding to the "top 2%" will be calculated and applied retroactively. Based on the official property prices announced by the Ministry of Land, Infrastructure and Transport, the top 2% threshold is expected to be between approximately 1.12 billion and 1.15 billion KRW. This threshold is calculated by combining not only apartment complexes but also detached houses, which corresponds to slightly less than 1.6 billion KRW in market price.

For apartment complexes alone, houses with official prices above 1.2 billion KRW account for 1.9% of all houses. In Seoul, houses with official prices above 1.2 billion KRW make up about 9%.

By setting the tax threshold as a "ratio" rather than a fixed amount, significant changes are expected in the existing 종부세 system. The government must calculate and announce the annually changing tax threshold every year. Moreover, as the government is implementing policies to realize the official property prices, the 종부세 tax threshold is likely to show an upward trend linked to these policies.

The government finalizes the official property prices for apartment complexes every April. Based on this, the amount corresponding to the "top 2%" tax threshold will be calculated, and the enforcement decree will be revised annually to announce this amount. Since the actual payment of 종부세 occurs in December, it is expected that the government will proceed with revising the enforcement decree soon to apply the new standard starting this year.