Chungcheong, Jeolla, and Ulsan Doubled... Comprehensive Real Estate Tax Scope Expands to Provinces (Comprehensive)

2021 Housing Comprehensive Real Estate Holding Tax Notification Status by City and Province
Number of Taxpayers Greatly Increased in All 17 Cities and Provinces
Sejong City Nearly Tripled to Rank First…Busan Doubled from 23,000 to 46,000
Chungbuk Tax Amount Soared Nearly Ninefold from 8 Billion KRW to 70.7 Billion KRW
Song Young-gil, Democratic Party Leader & Taxation Office Chief: "It Is Not a Bomb"

On the 22nd, when the National Tax Service began sending comprehensive real estate tax notices, an apartment complex in Dongjak-gu was viewed from the observatory of 63 Square in Yeouido, Seoul. Photo by Kang Jin-hyung aymsdream@

[Sejong=Asia Economy Reporter Kim Hyun-jung] Due to the rise in real estate prices and the government's efforts to reflect actual market prices in official assessments, the number of taxpayers liable for the comprehensive real estate holding tax (종합부동산세, Jonghap Budongsanse) has significantly increased not only in Seoul and the metropolitan area but also across all 17 cities and provinces nationwide. The number of notifications in Sejong City, where real estate prices have recently surged, nearly tripled, and in regions traditionally considered less popular for real estate investment such as Chungcheong, Jeolla, and Ulsan, the number of tax notifications issued doubled compared to last year. Although some criticize this year's comprehensive real estate holding tax as a "bomb," the ruling Democratic Party and the Ministry of Economy and Finance, the responsible government agency, have repeatedly stated that "it is not a tax bomb."

On the 23rd, the National Tax Service announced the '2021 Housing Comprehensive Real Estate Holding Tax Notification Status by City and Province.' Based on the number of taxpayers notified, Sejong City saw the largest increase nationwide, rising from 4,000 last year to 11,000 this year, an increase of 7,000 (175%). The comprehensive real estate holding tax notified in Sejong City also jumped from 4.4 billion KRW to 25.9 billion KRW during the same period, an increase of 21.5 billion KRW (488.6%).

Other areas where the number of taxpayers receiving notifications doubled (100% or more increase) appeared nationwide. Chungnam increased from 7,000 to 14,000, Jeonbuk from 4,000 to 9,000, and Jeonnam and Ulsan each from 4,000 to 8,000. Additionally, Busan rose from 23,000 to 46,000, and Gyeongnam from 8,000 to 16,000, both recording a 100% increase.

During the same period, Seoul and Gyeonggi showed relatively smaller increases in the number of taxpayers and tax amounts, but their absolute figures were overwhelming. The number of taxpayers notified in Seoul, which was about 393,000 last year, rose by 87,000 (22.1%) to reach 480,000 this year, and the notified tax amount surged from 1.1868 trillion KRW to 2.7766 trillion KRW, an increase of 1.5898 trillion KRW (134.0%). Gyeonggi's notified taxpayers increased from 147,000 to 238,000, a rise of 91,000 (61.9%), and the tax amount jumped from 260.6 billion KRW to 1.1689 trillion KRW, an increase of 908.3 billion KRW (348.5%). Seoul accounted for 50.6% and Gyeonggi 25.1% of the total notified taxpayers (947,000). Based on the notified tax amount (5.6789 trillion KRW), Seoul held 48.9% and Gyeonggi 20.6%.

Based on the notified tax amount, after Seoul and Gyeonggi, Gyeongnam and Busan saw the largest increases. Gyeongnam's notified tax amount rose from 108.9 billion KRW last year to 429.3 billion KRW this year, an increase of 320.4 billion KRW (294.2%). In Busan, the amount increased from 45.4 billion KRW to 256.1 billion KRW (464.1%) during the same period. The largest increase rate in tax amount was in Chungbuk, which surged from 8 billion KRW to 70.7 billion KRW, an increase of 62.7 billion KRW (783.8%).

Some criticize the comprehensive real estate holding tax as a "bomb" due to the significant increase in the number of taxpayers and tax amounts, including single-homeowners nationwide. According to analysis by Yoo Kyung-jun, a member of the People Power Party, the average notified tax amount for single-homeowner households this year is 1,515,577 KRW, a 55.5% increase from last year's 974,513 KRW. In response, Song Young-gil, leader of the Democratic Party, said on the day, "The comprehensive real estate holding tax on a 2.6 billion KRW house is less than the tax on a Sonata mid-sized car," and Kim Tae-joo, head of the Taxation Office at the Ministry of Economy and Finance, explained, "Most of the housing comprehensive real estate holding tax notified this year is borne by multi-homeowners and corporations. This is an expected policy effect from strengthening the tax to stabilize the housing market. Since it is not a tax imposed on ordinary citizens, it is difficult to agree with the term 'bomb.'"

Officials affiliated with the Citizens' Coalition for the Unconstitutionality of the Comprehensive Real Estate Tax posted a notice regarding the unconstitutionality claim of the Comprehensive Real Estate Tax at an apartment in Seocho-gu, Seoul on the 22nd. Photo by Kang Jin-hyung aymsdream@

The comprehensive real estate holding tax is levied on individuals who own taxable houses and land in Korea as of the tax base date (June 1 each year). Under the Moon Jae-in administration, with the rapid rise in real estate prices and simultaneous increases in the comprehensive real estate holding tax rate, fair market value ratio, and official price realization rate, the number of taxpayers and tax amounts have surged nationwide. In particular, the nationwide average official price increase rate for apartment-type housing this year recorded 19.1%, the highest in 14 years, and the fair market value ratio was adjusted from 90% in 2020 to 95% this year.

The National Tax Service began sending out this year's comprehensive real estate holding tax notifications from the 22nd. They can be viewed on Hometax from the 22nd and are expected to be received by mail around the 24th to 25th. The filing and payment deadline for the comprehensive real estate holding tax is from the 1st to the 15th of next month.