[Anchor]
The government is set to unveil a plan for real estate tax reform later this month. There are growing calls for changes that would encourage homeowners to put their properties on the market and revitalize real estate transactions.
Lee Seong-hoon reports.
[Reporter]
This is an apartment complex in Banpo-dong, Seocho-gu, Seoul.
With the government-assessed value of an 84-square-meter unit rising to over 700 million won, property holding taxes are expected to increase by more than 40 percent this year.
With the government also signaling a broader overhaul of real estate taxes, homeowners are facing complex calculations amid concerns that their tax burden could grow even further.
[Real Estate Agent in Seocho-gu, Seoul: People are currently waiting to see how the tax reform will unfold. Depending on the changes to holding taxes, senior homeowners are quite likely to put their homes on the market.]
Although the government's proposal has not yet been released, potential measures being discussed include adjusting the "fair market value ratio" used to calculate the Comprehensive Real Estate Holding Tax, reducing long-term holding deductions for non-resident single-home owners, and refining the system to prioritize actual residents.
The government is also considering where to set the threshold for ultra-high-priced homes and whether to shift the taxation focus from the number of homes owned to the total value of the properties.
If the fair market value ratio, currently at 60 percent, is raised to 80 percent, holding taxes in major areas of Seoul could increase by nearly 50 percent.
[Woo Byung-tak, Specialist at Shinhan Premier Pathfinder: For high-priced homes in the Gangnam and Seocho areas, it is common for the increase to approach 50 percent. Even in other regions, including the Han River belt, holding taxes are expected to rise by anywhere from 30 percent to a maximum of 40 percent compared to the previous year.]
While the actual tax burden may increase, some analysts predict that the effect of inducing property sales will be limited in areas where expectations for rising home prices remain high.
The argument is that raising holding taxes alone is unlikely to significantly increase the supply of properties or stabilize prices.
The Organization for Economic Cooperation and Development (OECD) recently recommended a tax reform direction that reduces transaction taxes while increasing holding taxes. Deputy Prime Minister Koo Yun-cheol has also emphasized the need for a balance between transaction and holding taxes, drawing attention to whether transaction taxes will also be adjusted.
[Kim Woo-cheol, Professor of Taxation at the University of Seoul: I believe that raising holding taxes while lowering transaction taxes, and simultaneously providing capital gains tax benefits, would be the way to bring more properties to the market. Ultimately, the best approach right now is not to suppress demand, but to disperse it.]
The government plans to collect public opinion through open forums on housing supply, finance, and taxation from July 14 to 16. Following a major presidential debate on real estate policy on July 23, the final tax law amendment is scheduled to be announced at the end of this month.
Reported by Lee Seong-hoon | Video by Ahn Yeo-jin | VJ by Jeong Han-wook
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