Gyeonggi-do Corrects 3,558 Individual Houses Where Land Value Exceeds 'Land + House Price'

Gyeonggi Provincial Government Gwanggyo New Office Building

[Asia Economy (Suwon) = Reporter Lee Young-gyu] Gyeonggi Province conducted a comprehensive adjustment last year on 3,558 houses exhibiting characteristic inconsistencies and price reversal phenomena to enhance the fairness and equity of publicly announced real estate prices used for taxes, charges, and welfare.

Characteristic inconsistency refers to the situation where the departments responsible for individual land prices (land department) and individual housing prices (tax department) investigate land characteristics such as relation to roads, elevation, and shape differently, resulting in different prices. When such characteristic inconsistencies occur, the combined individual housing price (land price plus house price) may be publicly announced as lower than the land price (individual land price), which is called a price reversal phenomenon.

To prevent this, the province hired professional appraisers and, starting from June 2021, uniquely among metropolitan local governments, directly pursued adjustments. Last year, a total of 3,558 houses were adjusted, including 2,109 with characteristic inconsistencies and 1,449 with price reversal phenomena.

For example, as of January 1 last year, the individual housing price (land + house) of B house in A city was publicly announced as 272 million KRW, while the individual land price was 738.99 million KRW, showing that the land price was nearly three times higher than the combined land and building value. Although located on the same lot, the housing department classified it as a residential area, while the land price department classified it as a commercial area, and each announced prices accordingly. Since residential areas are evaluated relatively lower in price than commercial areas, a price reversal phenomenon occurred.

Accordingly, after on-site verification of the property, the province judged it appropriate to correct the individual housing characteristics to commercial area and notified the city and county offices for adjustment.

When the province notifies the city and county offices of the adjustment, they conduct a review by the Real Estate Price Public Announcement Committee and then correct and announce the characteristics in line with the announcement date of the individual housing price or individual land price (April 28 this year).

Choi Won-sam, head of the provincial tax administration division, said, "Individual housing prices and individual land prices are standard prices used for imposing local taxes such as property tax and acquisition tax, as well as national taxes like comprehensive real estate tax," adding, "We expect that this adjustment will realize fair tax justice."