A Building Worth 32 Billion Won Reported as 6 Billion Won... NTS Imposes Taxes on Unrealistically Low Prices

NTS Appraises 75 High-Priced Properties in Q1, Including Detached Houses
Appraised Value Reaches 534.7 Billion Won, 88% Higher Than Reported Amount

The National Tax Service (NTS) has conducted appraisals and imposed taxes on small buildings and high-priced houses that were reported at unrealistically low prices in order to reduce inheritance and gift taxes. For one small building in the Seongsu-dong cafe street, the reported value was more than five times lower than the appraised value.

On April 24, the NTS announced that in the first quarter of 2025, it had appraised a total of 75 real estate properties and imposed taxes based on appraised values totaling 534.7 billion won, which is an 87.8% increase over the reported value of 284.7 billion won.

Notably, for a small building in the Seongsu-dong cafe street that had been reported at a standard market price of 6 billion won, the appraised value reached 32 billion won, representing an increase rate of 433%. The appraised value was more than five times higher than the standard market price.

Since 2020, the NTS has implemented a real estate appraisal program to ensure that inherited or gifted real estate is taxed based on market value. From 2020 to 2024, the NTS appraised 896 small buildings and imposed taxes based on appraised values totaling 9.7 trillion won, which is a 75% increase compared to the reported value of 5.5 trillion won. This year, the budget for the program was significantly increased to 9.6 billion won, and the scope of appraisals was expanded to include not only small buildings but also high-priced apartments and detached houses.

According to the appraisal results for the first quarter of this year, the average increase in value per property was 3.61 billion won for small buildings, which was higher than the 3.01 billion won increase for houses. However, the rate of increase in appraised value compared to the reported value was higher for houses at 103.7%, compared to 79.4% for small buildings.

Looking at the appraisal results for houses, the rate of increase in appraised value compared to the reported value was particularly high for detached houses, at 151%, which was higher than for other types of houses. For example, a detached house in Nonhyeon-dong, Seoul, with a total floor area of 255 square meters, was reported at 3.7 billion won, but the appraised value reached 14 billion won. The reported value was only 26.4% of the appraised value.

For ultra-high-priced large apartments, where there are few comparable sales, there were several cases in which the reported value was lower than that of nearby medium- or small-sized apartments. For example, the reported value (standard market price 2 billion won) for the large Cheongdam Shindongabilat apartment (226 square meters) was lower than the reported value (transaction price 2.1 billion won) for a nearby medium- or small-sized Cheongdam Xi apartment (49 square meters). The NTS imposed taxes based on the appraised value of 4 billion won.

An NTS official stated, "In the first quarter of this year, after the NTS announced its plan to expand appraisals, the proportion of high-priced real estate (with a standard market price of 2 billion won or more) reported at appraised value rose to 60.6%, which is about 12 percentage points higher than the 48.6% recorded in 2024. The NTS will continue to rigorously implement the appraisal program to ensure that inherited or gifted assets reported at significantly lower standard market prices are appraised at market value, so that taxpayers pay their fair share of taxes."