Abolition of Public Price Realization Plan... "Reducing Tax Burden by Eliminating Excessive Increases"

Abolished from next year's announcement... "2020 level applied until then"

The Moon Jae-in administration's plan to reflect up to 90% of market prices in the 'officially assessed property price realization plan' will be completely abolished. The government intends to scrap the realization plan that artificially raises real estate official prices to reduce the tax burden on the public.

President Yoon Suk-yeol is speaking at the 21st Public Livelihood Discussion Forum held on the 19th at Mullae Arts Factory in Yeongdeungpo-gu, Seoul, under the theme "A New Miracle of the Han River Created by Urban Innovation." / Photo by the Presidential Office Press Photographers Group

On the afternoon of the 19th, the Ministry of Land, Infrastructure and Transport announced this at the 21st Public Discussion on Livelihood held at Mullae Arts Factory in Yeongdeungpo-gu, Seoul, unveiling the 'Three Major Innovation Plans for Urban Space, Residence, and Quality.'

The Ministry applied an average realization rate of 69% in calculating official property prices last year and this year. Previously, considering the prolonged transaction freeze due to the housing price decline in 2022, the realization rate was lowered to the 2020 level. This was an adjustment of the 'official price realization roadmap' promoted during the Moon Jae-in administration's real estate price surge period to fit the current situation.

At that time, the Moon administration set a goal to increase the realization rate annually until 2030 for apartment complexes, until 2035 for standard houses, and until 2028 for standard land. However, as housing prices soared, the official prices used as the tax base also rose, leading to increased tax burdens. According to the Korea Institute of Public Finance, if the official price realization plan proceeds as scheduled until 2035, the property tax burden is estimated to increase by 61%.

In response, the Yoon Suk-yeol administration initially considered revising the realization rate targets but ultimately decided to abolish the plan. Currently, official prices are used in 67 systems including property tax, and if the realization plan is abolished, the economic burden on citizens from taxes and contributions such as property tax and health insurance premiums is expected to be significantly reduced.

A legal amendment is required to abolish the official price realization plan. Article 26, Paragraph 2 of the current Real Estate Price Public Announcement Act states, "The Minister of Land, Infrastructure and Transport shall set target rates for reflecting real estate market prices to ensure that official prices reflect appropriate prices and maintain balance according to the type and region of real estate, and shall establish plans to achieve this as prescribed by Presidential Decree."

The Ministry plans to actively utilize the ongoing research project to apply the abolition of realization starting from next year's official prices. Follow-up measures, including amendments to the 'Real Estate Price Public Announcement Act,' will be completed by November this year.

A Ministry official said, "Abolishing the official price realization plan means removing the government's obligation stated in Article 26, Paragraph 2 of the Real Estate Price Public Announcement Act itself," adding, "Until the law is amended, a temporary measure to fix the realization rate at the 2020 level can be used."