Marapu Owners Must Pay 600,000 KRW This Year
Number of Taxpayers for Housing Tax Surpasses 1 Million for the First Time This Year
Officially Announced Prices Surpass Actual House Prices
[Asia Economy Reporters Minyoung Kim, Haeyoung Kwon in Sejong] Although house prices have been on a downward trend this year, the number of taxpayers subject to the comprehensive real estate holding tax on housing has exceeded 1 million for the first time ever, likely fueling strong dissatisfaction among homeowners. Despite house prices dropping by several hundred million KRW in some cases, the tax calculation is based on prices as of June this year, before the full decline in prices, which may cause taxpayers to feel a heavier tax burden. In particular, with the failure to introduce the 300 million KRW special deduction, about 93,000 people owning properties with official prices between 1.1 billion and 1.4 billion KRW (government proposal) will receive comprehensive real estate tax bills again this year.
◇ Apartments with Official Prices Between 1.1 and 1.4 Billion KRW Must Pay Comprehensive Real Estate Tax as Usual = According to a simulation requested from Woobyungtak, team leader at Shinhan Bank WM Consulting Center, assuming a 60% fair market value ratio, an 84.59㎡ unit at Mapo Raemian Prugio in Mapo-gu, Seoul, must pay 609,120 KRW in comprehensive real estate tax this year. The official price rose by 9.27% compared to last year. If the 300 million KRW special deduction had been applied, this unit with an official price of 1.382 billion KRW would not be subject to the tax. The 84.69㎡ unit at Mapo Yeomri Mapo Xi must pay 427,680 KRW this year, a 108% increase from last year's 205,200 KRW. Wangsimni Tens Hill (84.92㎡) paid only 34,200 KRW last year but must pay 371,520 KRW this year, a 986% increase. Raemian Godeok Hillstay and Gwangjang Hyundai 5th Complex became subject to the comprehensive real estate tax this year due to the increased official prices.
However, due to the downward adjustment of the fair market value ratio, which is the basis for calculating this year's comprehensive real estate tax and property tax, the overall holding tax burden is expected to decrease this year. For example, although the comprehensive real estate tax amount on the Marapu (84㎡) tax bill has increased, the reduction in property tax means the combined holding tax is expected to decrease by about 5.7% compared to a year ago. The problem lies in homeowners' psychology. Because house prices have fallen so sharply, it is difficult for them to feel the effect of the reduced holding tax burden.
Team leader Woo said, "If in recent years, homeowners accepted the rising comprehensive real estate tax as linked to the rapid increase in house prices, currently, despite house prices dropping by hundreds of millions of KRW compared to two years ago, homeowners feel that the tax relief is not significant." In fact, on real estate communities, complaints are rampant, such as "They taxed unrealized gains, so now that house prices have fallen, shouldn't they return the money?" and "They raised official prices to create a holding tax bomb and are only engaging in political strife."
◇ Official Price Surpassing Actual Price... Tax Resistance Expected to Grow = With real estate transactions plummeting and house prices falling sharply this year, there have been cases where official prices exceed actual house prices, a phenomenon known as official price reversal. According to the Ministry of Land, Infrastructure and Transport's real transaction price disclosure system, an 85㎡ unit in Helio City, Garak-dong, Songpa-gu, Seoul, was traded for 1.785 billion KRW on the 16th of last month.
However, when checking the Ministry's official apartment prices, some units of the same size exceeded 1.8 billion KRW as of January 1 this year. The actual transaction price is nearly 20 million KRW lower than the official price. This is expected to increase dissatisfaction among taxpayers receiving comprehensive real estate tax bills.
According to the government, the number of correction requests from taxpayers claiming excessive tax amounts reached 1,481 last year, a 79.1% increase from the previous year. Some taxpayers have filed lawsuits to cancel the comprehensive real estate tax imposition, arguing that it violates the principle of tax legality and constitutes double taxation. This year, with rapid price drops and a surge in urgent sales, resistance to the comprehensive real estate tax is expected to intensify. Despite falling real estate prices, the tax burden remains high, and taxpayers are increasingly dissatisfied with having to pay comprehensive real estate tax in line with rising official prices. Reflecting this situation, the government plans to announce a revised plan for the official price realization this month.
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