[Property Tax Q&A] How Much Are My Home's Officially Assessed Value and Property Tax?

[Asia Economy Reporter Hwang Seoyul] On the 23rd, along with the 2022 official public housing price announcement, measures to ease the property tax burden for single-homeowners were presented. According to the government’s plan, the official public housing price rose by 17.22% compared to last year. However, for single-homeowners, last year’s official price will be applied when calculating this year’s property tax. We have organized readers’ frequently asked questions about official prices and property taxes, which vary depending on the number of houses owned and housing prices, in a Q&A format.

Q. Where can I check the official price of my house? And how can I find out how much property tax I will have to pay?

A. The official price (draft) can be viewed on the internet site ‘Real Estate Official Price Notification’ or at the civil service offices of the city, county, or district where the house is located from March 24 to April 12. Afterward, the Central Real Estate Price Public Announcement Committee will review and finalize the official price of apartment complexes on April 29.

Once you have checked the official price, you can estimate this year’s property tax. However, if you are a single-homeowner, you must calculate it using last year’s official price. This is a kind of ‘detour’ provided by the government to prevent a sudden surge in property tax. For example, even if a house’s official price was 500 million KRW last year and rose to 600 million KRW this year, this year’s property tax will be calculated based on 500 million KRW.

Calculating property tax based on last year’s official price does not mean the tax will be the same as last year. Property tax consists of property tax and comprehensive real estate tax. If the official price is 1.1 billion KRW or less (based on last year’s price), only property tax is paid; if it exceeds 1.1 billion KRW, both property tax and comprehensive real estate tax are paid. Since property tax applies last year’s official price, the amount will be the same as last year’s property tax.

However, the comprehensive real estate tax may increase slightly compared to last year. The tax base for comprehensive real estate tax is calculated as ‘(official price - deduction amount (1.1 billion KRW for single-homeowners)) × fair market value ratio,’ and this year’s fair market value ratio rose by 5 percentage points to 100% compared to last year. Of course, if house prices have risen significantly over the past year, the official price would have increased substantially as well, so without the government’s decision to apply last year’s official price, this year’s comprehensive real estate tax would have been a ‘bombshell’ level. The government says that about 69,000 people were excluded from the comprehensive real estate tax base due to this measure.

And all these explanations apply only to single-homeowners. Multi-homeowners will be taxed on both property tax and comprehensive real estate tax using this year’s new official price, not last year’s, so both taxes will increase significantly.

Q. Why is the official price different within the same apartment complex?

A. The official price is calculated differently for each house based on detailed factors such as total deviation rate (floor, orientation, noise, etc.). Even within the same complex, if a unit faces south or has a view, which are more preferred, the actual transaction price is higher, so the official price can be set higher accordingly. Other factors affecting apartment value, such as privacy, exclusive garden on the first floor, or penthouse on the top floor, are also reflected within a 10% range. Whether resale restrictions apply, registration of land rights, or balcony expansions are also considered.

Q. Recently, house prices have been declining. Are the decreases reflected in the official price?

A. The official price is based on January 1 of each year. Therefore, any decline after January this year will not be reflected in this year’s official price but will be reflected in next year’s official price.

Q. If the official price rises, do I only have to pay more property tax? Are there any additional burdens?

A. Yes, the official price affects more than just property tax. There are 67 tax, welfare, and administrative systems linked to the real estate official price.

Except for exceptional cases such as government compensation, an increase in the official price generally leads to higher taxes and reduced welfare benefits, which can be seen as negative impacts.

First, for regional subscribers, health insurance premiums may increase. Premiums are determined by scores based on the combined value of apartments, land, and other properties. However, for workplace subscribers, premiums are based on income and are unrelated to the official price.

The official price can be converted into recognized income, and if the official price rises significantly and exceeds the income threshold, you may lose eligibility for various pensions such as the basic pension.

Besides property tax and comprehensive real estate tax, the official price directly affects inheritance tax, gift tax, and capital gains tax. Therefore, some people try to reduce taxes by making gifts or inheritance before the official price is finalized in June.

Q. I am a multi-homeowner, but I want to sell houses to become a single-homeowner because the property tax burden is heavy. Will I receive the benefits for single-homeowners (application of last year’s official price)?

A. If you become a single-homeowner before the tax base date of June 1, the property tax on the remaining single house will be calculated based on last year’s official price.

Q. If a transaction occurs on June 1, who pays the property tax?

A. Property tax and comprehensive real estate tax are billed to the owner as of the tax base date, June 1. That means the buyer who acquires the property on June 1 will be billed. If the balance payment date is June 1, even if the ownership transfer registration is processed after June 1, ownership is considered transferred on June 1. In summary, if either the balance payment date or the ownership transfer registration date is before June 1, the buyer pays the property tax for that year; if both dates are after June 1, the seller pays.

Q. The official price seems to have risen more than expected. I want to file an objection. How can I do that?

A. If you have any opinions during the official price (draft) viewing period (March 24 to April 12), you can submit a written opinion online via the ‘Real Estate Official Price Notification’ website, or by mail, fax, or in person at the civil service office or any branch of the Korea Real Estate Board by April 12. After the official price is finalized and announced on April 29, objections can be filed for one month until May 30. Submitted cases will undergo re-investigation and review and will be adjusted and announced by the end of June.

Q. The next government is said to plan tax reform policies. Is there a possibility that real estate taxes will be lowered?

A. President-elect Yoon Seok-yeol promised during his candidacy to ease regulations through normalization of real estate taxation. Representative pledges include ▲restoring real estate official prices to 2020 levels ▲freezing the comprehensive real estate tax fair market value ratio at 95% (2021 level) ▲reducing the comprehensive real estate tax rate for single-homeowners ▲integrating comprehensive real estate tax and property tax.

Policies such as ▲integrating comprehensive real estate tax and property tax and ▲reducing the comprehensive real estate tax rate for single-homeowners require legislative approval through National Assembly deliberation, so they are expected to take a long time. However, adjusting the fair market value ratio within the range of property tax (40%~80%) and comprehensive real estate tax (60%~100%) can be done by revising enforcement ordinances alone. Therefore, if the enforcement ordinance is changed before June 1, when the comprehensive real estate tax is determined, property tax may be adjusted.

For example, if a house with an official price of 1 billion KRW is subject to a 100% fair market value ratio, the tax base is 1 billion KRW, resulting in a certain tax burden. But if the ratio is lowered to 60%, the tax base becomes 600 million KRW, significantly reducing the tax amount.