Number of Households Subject to 30% Limit on Residential Property Tax Decreases for the First Time in 5 Years
Dobong, Nowon, Guro Districts See Increase in Many Mid-Low Price Areas
The number of households in Seoul paying up to the 30% limit on residential property tax has decreased for the first time in over five years.
According to the '2018~2022 Residential Property Tax Imposition Status' data submitted by Seoul City to Kim Sang-hoon, a member of the People Power Party, the number of cases where property tax (based on the principal amount) increased by the maximum limit of 30% compared to the previous year dropped by about 34.8% (303,934 cases), from 872,135 cases in 2021 to 568,201 cases in 2022.
The amount of property tax imposed on these households also fell by nearly half (47.0%), from 755.9136 billion KRW in 2021 to 400.886 billion KRW in 2022, a decrease of 355.41276 billion KRW. The number of cases returned to the 2020 level, and the amount was even lower than in 2020.
Residential property tax is subject to a tax burden cap, which prevents the tax from increasing by more than 30% in a single year to avoid excessive tax burdens.
However, in recent years, as real estate prices surged, the number of houses taxed up to the cap skyrocketed. The number of cases increased sixfold from about 145,000 cases (135 billion KRW) in 2018 to about 872,000 cases (755.9 billion KRW) in 2021, and the amount of tax paid also increased more than 5.6 times.
In response, the Yoon Suk-yeol administration lowered the fair market value ratio, which serves as the tax base for residential property tax, from 60% to 45% on June 30, citing 'normalization of the real estate market' as the rationale. Additionally, the preferential tax rate for single-homeowners with a publicly announced property price of 900 million KRW or less was expanded.
As a result, despite a 14.2% increase in publicly announced prices (for multi-family housing in Seoul), the number of households taxed up to the property tax limit actually decreased.
Among Seoul’s autonomous districts, Gangnam-gu and Eunpyeong-gu saw the largest decreases in households subject to the 30% property tax cap. In Gangnam-gu, the number dropped by 60.7%, from 83,518 cases in 2021 to 32,840 cases in 2022. Eunpyeong-gu also saw a 60.3% decrease, from 22,065 cases last year to 8,755 cases this year. The taxes imposed decreased by 69.7% and 51.1%, respectively, compared to the previous year.
Seocho-gu (58.3%) and Songpa-gu (51.3%) also saw reductions of more than half compared to 2021, while Gangdong-gu (41.3%), Mapo-gu (39.9%), Yangcheon-gu (39.9%), and Gwangjin-gu (39.0%) experienced above-average decreases in households subject to the tax burden cap.
However, in areas with many mid- to low-priced homes such as Dobong-gu, Nowon-gu, and Guro-gu, the number of households subject to the tax burden cap increased.
Assemblyman Kim Sang-hoon said, "The five years under the previous Moon Jae-in administration were truly an era of 'pouring on real estate taxes.'" He added, "With the change of government, we have just entered the early stages of normalizing the real estate market." He further stated, "Following the reduction in households subject to the tax burden cap, I hope the Yoon Suk-yeol administration will redesign its real estate policies so that property taxes for all homeowners can be reasonably adjusted."
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