[Exclusive] "I Will Pay the Comprehensive Real Estate Tax Under a Single Name"... 15,000 Married Couples with Joint Ownership of One House Apply

One out of four eligible couples applied

Some express concerns that real estate tax policies change too frequently and are too complex

[Image source=Yonhap News]

[Asia Economy Reporters Kim Hyunjung (Sejong), Lee Hyunju] It has been reported that more than 15,000 couples jointly owning a single home have requested the government to tax the comprehensive real estate tax under a single name. This means that one out of every four eligible couples has applied for the change in tax assessment criteria. Some critics point out that frequent changes in real estate tax policies by the government are causing confusion, forcing even single-homeowners to take additional measures.

According to the ‘Comprehensive Real Estate Tax Special Taxation Application Status for Couples Jointly Owning One Home’ submitted by the National Tax Service to Choo Kyung-ho, a member of the National Assembly’s Planning and Finance Committee from the People Power Party, 15,137 couples jointly owning one home completed their special tax application with the National Tax Service between November 16 and 30. This number does not include applications sent by mail within the application period, and additional applications during the regular filing period in December may further increase the total number.

◆ One out of four eligible couples applied = Earlier, the National Tax Service sent notices to 128,292 eligible couples jointly owning one home, informing them about the option to apply for a change in the tax assessment method. Since only one spouse needs to apply, the maximum number of possible applicants is half the number of notices sent, which is 64,146. As a result, about 23.6% of the total eligible couples have applied for the change so far.

Until now, joint ownership by couples has been considered one of the most useful ‘tax-saving tips’ for single-homeowners. This is because jointly owned single homes are taxed individually, allowing each spouse to deduct KRW 600 million based on the publicly announced property price, totaling KRW 1.2 billion in deductions. In contrast, under single ownership, single-homeowners can only deduct up to KRW 900 million, and multi-homeowners up to KRW 600 million. However, after the amendment to the comprehensive real estate tax law passed in August, which allows single-homeowners to deduct up to KRW 1.1 billion in total, controversy arose over fairness with the existing joint ownership system. The main criticism is that joint ownership, even for single homes, cannot receive overlapping benefits of age tax credits and long-term holding tax credits, so the tax law amendment could actually result in disadvantages.

◆ Concerns over increased market confusion due to frequent tax law changes = Some argue that frequent changes in real estate tax policies by the government are causing homeowners, including single-homeowners, to simultaneously attempt to reduce tax burdens and asset impacts, leading to ongoing market confusion.

The recent trend of choosing inheritance tax with a maximum rate of 50% over capital gains tax with a top rate of 75% is part of this context. According to the Korea Real Estate Board’s apartment transaction data (based on reporting dates), the number of apartment gifts nationwide reached 58,298 from the beginning of this year through August. This accounts for 6.8% of all transactions during the same period?including sales, judgments, exchanges, pre-sale rights transfers, and other ownership transfers?totaling 853,432 transactions, marking the highest figure for January to August since related statistics began in 2006.

Regarding this, Choo Kyung-ho of the People Power Party stated, “Since the Moon Jae-in administration, real estate-related tax policies have become excessively complex, resulting in repeated confusion even among single-homeowners. Among them, elderly people may suffer damages by failing to respond appropriately at the right time, which is concerning.”

Meanwhile, the newly established special taxation application for couples jointly owning one home this year is available only to domestic residents who, as of the tax base date of June 1, jointly own one home with their spouse and have no other household members owning a home. Applications can still be submitted within designated filing periods, and additional applications will be accepted during the regular filing period in December. If there are no changes after the initial application, the existing application details will be maintained.