SH Corporation "Requesting Exemption from Comprehensive Real Estate Tax on Rental Housing" to Pursue Constitutional Lawsuit

Filing Administrative Lawsuit for Refund Next Month

Seoul Housing and Communities Corporation (SH Corporation) has decided to pursue a constitutional lawsuit against the comprehensive real estate tax imposed on public rental housing. Next month, it will also file an administrative lawsuit seeking a refund for the comprehensive real estate tax paid over the past five years.

On the 10th, Kim Heon-dong, president of SH Corporation, explained the background of the initiative, stating, "It is unreasonable to impose the comprehensive real estate tax on rental housing, which is a public residential welfare asset," and added, "Exemptions from holding taxes such as the comprehensive real estate tax and property tax are necessary."

The total holding tax on approximately 135,000 rental housing units owned by SH increased from 9.3 billion KRW in 2012 to 69.7 billion KRW in 2022. During the same period, the comprehensive real estate tax rose from 2.8 billion KRW to 29.4 billion KRW.

Although the comprehensive real estate tax rate for public housing operators was lowered last year to a maximum of 0.027, the same as owners of two or fewer houses, SH Corporation maintains that the tax remains excessive and an unnecessary regulation. Last year, SH Corporation paid about 14.8 billion KRW in comprehensive real estate tax, of which 8.3 billion KRW was housing-related comprehensive real estate tax.

An SH Corporation official stated, "We operate rental housing as long-term rental housing without selling it, supporting the housing stability of Seoul citizens rather than realizing capital gains from rising real estate prices," and added, "It is contradictory that the comprehensive real estate tax, introduced to curb speculation by high-value real estate holders and stabilize real estate prices, is imposed on rental housing, which is a public residential welfare asset."

In particular, about 74% (6.1 billion KRW) of the housing-related comprehensive real estate tax paid by the corporation last year was for long-term lease housing in the Gangnam area, exceeding the official property price standard. An SH Corporation official said, "There is a concern that the comprehensive real estate tax could deteriorate into a policy tool that fails to publicly protect actual demanders of rental housing in certain areas such as Gangnam."

The rent for rental housing owned by SH Corporation is about 35% of the private market price. It was even frozen for 10 years until 2022. The corporation estimates that the benefits citizens gain from reduced housing costs amount to approximately 1.3 trillion KRW annually.

SH Corporation has submitted a request for local tax reduction to the Ministry of Land, Infrastructure and Transport and plans to soon request legislation for complete exemption from property tax to the National Assembly.