▲ Apartments in the Gangnam 3 districts are viewed from Lotte World Tower in Songpa-gu, Seoul. (Photo: Yonhap News)
With the comprehensive real estate holding tax system being overhauled starting next year, tax burdens are projected to increase for homes with a market value exceeding 3.5 billion won.
For homes valued at over 4.6 billion won, the tax rate will rise to 1.5% next year and 2.0% the following year, which is expected to cause a sharp surge in the comprehensive real estate tax.
According to the housing-specific comprehensive real estate tax rates in the 2026 tax reform plan announced today by the Ministry of Finance and Economy, the tax rate for the taxable value bracket of 6 billion won to 12 billion won will increase from the current 1.0% to 1.3% next year.
The threshold for comprehensive real estate tax imposition will be eased from the current public appraisal value of over 1.2 billion won to over 1.4 billion won, while the fair market value ratio will be raised from 60% to 70%.
The comprehensive real estate tax uses the taxable value as the basis for taxation, which is calculated by subtracting the basic deduction amount from the publicly appraised value of the housing and then applying the fair market value ratio.
The comprehensive real estate tax amount is determined by multiplying the tax rate corresponding to each taxable value bracket and then subtracting progressive deductions.
This structure incorporates various additional deductions based on residency, age, and other factors.
Assuming a scenario excluding a resident single-home household, a 69% public appraisal value realization rate, and various additional deductions, the comprehensive real estate tax burden will decrease for homes with a market value of up to 3.4 billion won.
When applying the taxable value bracket exceeding 6 billion won where tax rates will be raised starting next year, the value falls in the 3.2 billion to 3.3 billion won range, but with the basic deduction amount increasing by 200 million won to 1.4 billion won starting next year, the tax burden will actually decrease slightly.
The bracket where the tax burden begins to increase in earnest is estimated to start from homes with a market value of 3.5 billion won.
It is estimated that the tax amount will increase by 3.0% one to two years later compared to the current system.
The bracket where the tax burden increases steeply is analyzed to start from homes with a market value of 4.6 billion won.
Homes with a market value of 4.6 billion won currently fall under the taxable value bracket of 6 billion won to 12 billion won, thus being subject to a 1.0% tax rate.
However, one year later, the taxable value itself jumps into the 12 billion won to 25 billion won bracket.
Even if the taxable value bracket remained the same as the previous year, the tax rate would rise to 1.3%, but with the taxable value bracket itself moving up, the tax rate climbs to 1.5%, marking a 0.5 percentage point increase within a span of a year and increasing the tax burden.
One year later, the taxable value bracket remains unchanged, but the tax rate rises to 2.0%, resulting in the tax rate increasing by 0.5 percentage points for two consecutive years and further augmenting the tax burden.
The comprehensive real estate tax will increase by 27.4% one year later compared to the current system, and by 29.6% two years later.
For homes more expensive than 4.6 billion won thereafter, the comprehensive real estate tax will increase steeply by more than 28% after one year and more than 30% after two years.
As prices rise, the tax burden balloons even further, and as time passes, the gap in growth rates widens rapidly.
In the case of a home with a market value of 5.0 billion won, the tax burden one year later will increase by 29.2% compared to the current system, but two years later it will increase by 39.4% compared to the present, expanding the growth rate by more than 10 percentage points within a year.
The Ministry of Finance and Economy stated that homes with a market value of up to 2.0 billion won will be excluded from taxation based on a single-home resident household.
As the basic deduction is expanded, the targets of comprehensive real estate taxation will be trimmed from the top 3.1% (487,000 households) of apartment units this year to 2.3% (363,000 households).
Along with this, the Ministry of Finance and Economy explained that for homes valued between 2.0 billion won and 3.0 billion won (top 1.1%, approximately 168,000 households), the comprehensive real estate tax amount will decrease.
For homes valued between 3.0 billion won and 4.0 billion won, it explained that there will not be a large change in the tax amount.
Some parts of this bracket may see their tax amounts decrease or increase slightly.
This applies to 103,000 households (0.7%) nationwide.
It stated that taxation will be normalized starting from homes exceeding 4.0 billion won (approximately 65,000 households, 0.4%).
This is interpreted to mean that the tax burden will increase significantly starting from this bracket.
Ultimately, this targets the top 0.4% of apartment units nationwide with pinpoint precision.
This is a point that reveals the intention to zero in on ultra-luxury homes.
Simply applying last year's comprehensive real estate tax paying headcount, it is projected that the tax burden will increase for about 80,000 people.
This accounts to 16.6% of comprehensive real estate taxpayers (480,577 people) and 0.5% of all homeowners (15.98 million people).
However, individual tax burdens will vary depending on publicly appraised land values, the number of homes owned, and residency status.
According to the results calculated by the Ministry of Finance and Economy by applying a 60-year-old single-home owner and a 10-year residency requirement, when dividing homes into 500 million won intervals starting from a market value of 2.0 billion won, the comprehensive real estate tax decreases for homes up to 3.0 billion won.
However, the comprehensive real estate tax for a home valued at 3.5 billion won will increase by 10.7% compared to the current 1.918 million won, reaching 2.124 million won each one and two years later.
As tax rates gradually rise thereafter, for a home valued at 4.0 billion won, the tax will increase by 23.8% from 2.627 million won to 3.252 million won.
For a home valued at 5.0 billion won, the comprehensive real estate tax will increase by 35.4% from 4.539 million won to 6.146 million won one year later.
Two years later, it will increase to 9.785 million won, which is 2.2 times the current amount.
If the owner does not reside in the home and merely holds it, the tax burden changes more dramatically without any decreasing brackets.
Similarly, if a 60-year-old single-home owner merely holds the property for 10 years without residing in it, the deduction rate gradually shrinks from the current 60% to 40% and then 20%.
While the 20% applied to those aged 60 and older through age-based deductions remains the same, the holding deduction is halved and then phased out starting in 2029.
Accordingly, the comprehensive real estate tax for a home valued at 2.0 billion won will increase from the current 276,000 won to 1.14 million won one year later, and to 1.521 million won two years later.
This balloons to 5.5 times within two years.
For a home valued at 3.0 billion won, it is estimated to increase 4.7-fold over two years to 4.247 million won, and for a 5.0 billion won home, 4.3-fold to 19.703 million won.
The burden on multi-home owners also increases.
For those owning three or more homes, the fair market value ratio rises from the current 60% up to 80% after 2028.
If someone owns three homes of the same value, resides in one of them, and the housing value is around the 2.0 billion won level, the comprehensive real estate tax will increase 3.5-fold from the current 1.267 million won to 4.424 million won two years later.
Over the same period, a 3.0 billion won home will balloon 3-fold (from 3.139 million won to 9.512 million won), and a 5.0 billion won home 2.2-fold (from 15.667 million won to 34.385 million won).
However, the scale of tax deductions varies depending on actual multi-home ownership status, holding periods, and residency periods.
Since publicly appraised values are also based on this year, they will change next year, making it difficult to predict how much each individual's comprehensive real estate tax burden will increase.
An official from the Ministry of Finance and Economy explained, "Because the comprehensive real estate tax is a per-individual tax, it is not easy to distinguish how many people are subject to taxation based on statistics of apartment units subject to the tax, and deductions also vary greatly by individual, requiring many assumptions."
(Photo: Yonhap News)
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