Comprehensive Real Estate Tax Shifts to Value and Residency, Raising Burdens for Non-Residents

[Anchor]

The government has unveiled a real estate tax reform proposal. The framework of taxation has shifted from holding to residing, and from the number of homes to the value of homes. The tax burden for ultra-luxury homes is also expected to increase compared to before.

Reporter Jeong Seong-jin has the details.

[Reporter]

The government named fair taxation as the direction for this real estate tax reform proposal.

It focused on easing the burden for single-home owners who live in their own houses, while increasing the burden for non-residents who own homes but do not live in them.

[Koo Yun-cheol, Deputy Prime Minister and Minister of Finance and Economy: Under the principle that a house is not for 'buying' but for 'living', we aim to establish a residency-centered housing market...]

Reflecting recently rising housing prices, the threshold for the comprehensive real estate holding tax for a single-home household will be raised from the existing official public price of 1.2 billion won to 1.4 billion won.

This is equivalent to about 2 billion won in market value.

However, a clear distinction in tax burden was made depending on whether the owner resides in the property.

While the basic deduction amount for actual resident single-home owners increased to 1.4 billion won, the deduction amount for non-resident single-home owners will instead be lowered from the existing 1.2 billion won to 900 million won.

For a home with an official public price of 1.5 billion won, an actual resident's base amount subject to tax after subtracting the basic deduction would be 100 million won, whereas a non-resident's base amount would be 600 million won.

The fair market value ratio, which multiplies the tax rate by the amount after deductions, will be raised from the current 60% to up to 80%.

In response to criticisms that multi-home owners face reverse discrimination due to the preference for a single "smart" home, the comprehensive real estate tax rates will be unified based on housing value rather than the number of houses.

As long as the total official public prices of owned homes are the same, the same tax rate will apply whether one owns a single home or multiple homes.

Accordingly, for tax bases exceeding 1.2 billion won, the tax rates for single and dual-home owners will be raised to the level of the existing multi-home owners by 2028.

The criteria for tax credits previously supported for single-home households will also be changed from the holding period to the residency period, and a deduction limit of 6 million won has been newly established.

The limit on tax burden increases, which was capped at 1.5 times the previous year's property tax, will also be raised to 2 times.

[Cho Man-hee, Office of Tax Affairs, Ministry of Finance and Economy: The comprehensive goals are to enhance tax equity for homes above a certain value and normalize property taxes on non-resident multi-home owners to curb investment and speculative demand...]

The comprehensive real estate tax targets under the reform proposal are estimated at approximately 363,000 units, representing the top 2.3% nationwide, with an estimated tax revenue effect of 800 billion won next year.

(Photo: Lee Jae-young, Video Editing: So Ji-hye, Design: Lee Ga-jin)
※ Please note: This article was translated by AI and may contain errors.