Ministry of Land Applies Last Year's Market Price Fluctuation Rate for Estimates
Acro River View 78㎡ Ownership Tax: 15.99 Million Won, Up 33%
The government has decided to freeze the official real estate price realization rate for next year at the same level as this year, but property ownership taxes for apartments in major areas of Seoul are expected to increase. This is because as market prices rise, official prices increase as well. The burden of ownership tax rises more steeply compared to the increase in official prices, but it is not a significant jump when compared to the actual transaction price increases.
According to the Ministry of Land, Infrastructure and Transport's data released on November 13 regarding changes in official prices and estimated ownership taxes for major apartment complexes, the official price for the 78-square-meter unit of Acro River View in Seocho-gu, Seoul, will rise from 2.723 billion won this year to 3.284 billion won next year. This estimate assumes the same market price fluctuation rate as applied last year. As a result, the ownership tax (property tax plus comprehensive real estate tax) paid this year was 12.04 million won, but it is expected to increase by about 33% to 15.99 million won next year.
If we assume that the official price for the 111-square-meter unit of Shinhyundai 9th Complex in Apgujeong-dong, Gangnam-gu, will rise by about 26% to 4.378 billion won next year, the ownership tax will increase from 18.58 million won to 26.47 million won. The comprehensive real estate tax alone will increase by more than 7 million won. If the official price for the 84-square-meter unit of Jamsil Els in Songpa is assumed to rise to 2.133 billion won, the ownership tax will jump from 5.82 million won to 7.12 million won.
The official price for the 84-square-meter unit of Maporaemian Prugio is estimated at 1.511 billion won, with the ownership tax at 3.55 million won (up 23% year-on-year). For the 84-square-meter unit of Hangaram Apartment in Yongsan, the official price is 1.805 billion won, and the ownership tax is expected to be 5.52 million won (up 16%), according to the Ministry of Land, Infrastructure and Transport.
For the 84-square-meter unit of Punglim Apartment in Gongneung-dong, Nowon-gu, the official price is expected to rise by about 3%, and the ownership tax will be 690,000 won (up 5%). For the 84-square-meter unit of Daesang Town Hyundai Apartment in Dobong-gu, the official price will rise by 2%, and the ownership tax will be around 640,000 won (up 3%). In these areas, the official prices are below the threshold for the comprehensive real estate tax, so only property tax is paid, with no comprehensive real estate tax imposed.
These estimates are based on the assumption of a single household owning a single home, applying the fair market value ratio (44% for official prices exceeding 300 million won and up to 600 million won; 45% for prices over 600 million won), the special tax rate (for official prices up to 900 million won, 0.05 percentage points deducted from the standard rate), the standard tax rate (for official prices over 900 million won, 0.1% to 0.4%), and a 5% cap on the tax base. Local education tax (20% of the property tax) and the urban area portion of the property tax (0.14% of the property tax base) are included.
The comprehensive real estate tax assumes a single household with a single home, applying a basic deduction of 1.2 billion won, a fair market value ratio of 60%, and includes the special rural tax (20% of the comprehensive real estate tax). Given that apartment prices in Seoul have risen more this year than last year, there is a possibility that the actual tax burden could increase slightly beyond these estimates.
© The Asia Business Daily(www.asiae.co.kr). All rights reserved.
