"Joint Spousal Ownership, Not a Single-Homeowner... Excluded from Comprehensive Real Estate Tax Relief"

'Ruling Party's Comprehensive Real Estate Tax Relief Plan'... Applies to Single-Home Households
If the official price of a single-home household exceeds 1.2 billion KRW, the incentive for joint spousal ownership disappears

Kim Jin-pyo, Chairman of the Real Estate Special Committee of the Democratic Party of Korea, is announcing additional supply measures to stabilize the housing market at the National Assembly Communication Office on the 10th. Photo by Yoon Dong-joo doso7@

[Asia Economy Reporter Jang Sehee] As the ruling party and government plan to set the comprehensive real estate tax (종합부동산세) threshold at the top 2% to partially ease the tax burden, homeowners with a jointly owned single property under a married couple’s name are expected not to be included in the eased category of single household single homeowners. However, there is also analysis suggesting that joint owners may actually benefit, as they can apply to have the tax assessed under a sole ownership method.

According to the Ministry of Economy and Finance and the National Tax Service on the 27th, couples who jointly own one house do not qualify as single household single homeowners. Since the initial top 2% imposition plan applies to single household single homeowners, it appears that the ownership form will not be included.

A single household single homeowner refers to a person who solely owns one house among the household members.

Under the Income Tax Act, a "single household" is defined as a family unit living at the same address and sharing livelihood, including the resident, spouse, and siblings. Among them, even if the spouse lives separately by household separation, they are still considered part of the same household.

In particular, the comprehensive real estate tax applies the tax rate by considering ownership of shares or accessory land of a house as ownership of the house itself. Therefore, if a couple jointly owns one house with 50% shares each, they are taxed as if each owns one house within the same household.

The same applies if a couple jointly owns two houses; they are considered multi-homeowners owning two houses each.

For couples with joint ownership, if each holds half shares of a house with a publicly announced price of 600 million KRW, the comprehensive real estate tax exemption currently applies up to 1.2 billion KRW. A house priced at 1.15 billion KRW, which is the 2% threshold, is currently not subject to the comprehensive real estate tax. However, joint ownership couples are not eligible for senior citizen or long-term ownership deductions.

Ruling Party Plans to Ease Comprehensive Real Estate Tax for Top 2%... 'Married Couples with Joint Ownership' Not Included

Since married couples with joint ownership are not single household single homeowners, they are excluded from the comprehensive real estate tax relief measures promoted by the ruling party.

Some argue that the combined deduction amount for couples should be increased in line with the expanded deduction range for single household single homeowners, but currently, there is no basis to provide additional benefits to couples with joint ownership.

As of this year, the price range corresponding to the top 2% of all houses is around 1.11 billion to 1.12 billion KRW based on the publicly announced price, which is still lower than the joint ownership deduction amount of 1.2 billion KRW.

However, according to the ruling party’s plan, the comprehensive real estate tax threshold for single household single homeowners will fluctuate annually based on the publicly announced price, so the threshold is likely to rise gradually with future price increases.

If the publicly announced price threshold for single household single homeowners exceeds 1.2 billion KRW in the future, the incentive to maintain joint ownership for couples will disappear.

However, under the current system, joint owners can apply to have the comprehensive real estate tax assessed in the way most advantageous to them, either as joint ownership or sole ownership.

If joint owners apply to change to sole ownership assessment, they will be subject to the top 2% threshold applied to single household single homeowners and will also be eligible for senior citizen and long-term ownership deductions.

Moreover, currently, increasing the combined deduction amount for couples from the total 1.2 billion KRW (6 billion KRW per person) would inevitably require raising the basic comprehensive real estate tax deduction amount itself. This would result in benefits extending to multi-homeowners as well, so it is unlikely that the ruling party and government will make additional adjustments in this regard.

Meanwhile, the ruling party has announced that it will consider additional application measures for married couples with joint ownership of a single house as it finalizes its party stance on the comprehensive real estate tax.