How to Differentiate Property Holding Taxes... Tax Reform Imminent

[Anchor]

Through this real estate debate, the policy to strengthen holding taxes on ultra-luxury homes has been reaffirmed. Things are taking shape in the direction of differentiating tax burdens, such as making exceptions for temporary non-residence due to work or education. The government plans to announce tax reform proposals, including real estate taxes, in the near future.

Reporter Jeon Hyeong-u.

[Reporter]

At today's (the 23rd) debate, the direction was clearly revealed: single-home owners living in their properties for residential purposes will not face increased tax burdens, but those holding homes for investment purposes or owning ultra-luxury homes will see their burdens increase.

In particular, President Lee Jae-myung hinted at exception clauses for non-resident single-home owners, noting that if someone has temporary reasons for non-residence, this cannot simply be viewed as an investment purpose.

[President Lee Jae-myung: If someone is temporarily not residing due to other circumstances but it is for 'residential use,' shouldn't this be treated the same as actual residence?]

However, for ultra-luxury homes, the tax burden is expected to increase regardless of whether the owner actually resides there.

The benchmark market price frequently mentioned by debate participants and online comments was 3 billion won.

Under this standard, about 166,000 households would be subject to the tax, which extends to apartments in the Han River belt areas such as Mapo and Seongdong.

If the threshold is set at 5 billion won, about 30,000 households, or 2% of all apartments in Seoul, would be affected, mainly focusing on the three districts of Gangnam.

For an apartment in Banpo with a market price of 5.7 billion won and an officially assessed value of 5.5 billion won, this year's holding tax is around 38 million won.

If the tax rate for ultra-luxury homes is raised and the tax burden cap—currently capped at a maximum of 1.5 times—is also increased, the holding tax could more than double.

An apartment in Daechi-dong with a market price of 3.6 billion won and an officially assessed value of 3.2 billion won incurs about 15 million won in taxes this year, and the holding tax burden is expected to vary significantly depending on whether the ultra-luxury home threshold is set at 3 billion won or 5 billion won.

[Woo Byung-tak, Specialist Advisor at Shinhan Premier Pathfinder: In areas corresponding to the Han River belt, it would be about 1.3 to 1.5 times compared to the previous year. For ultra-luxury homes exclusively, there is a possibility that the existing tax burden cap could be raised together to 2 or even 3 times.]

The government plans to announce a tax reform package at the end of this month or early next month, which will include price criteria for ultra-luxury homes, the scope of tax rate hikes, and whether to lower transaction taxes.

[Video Editing: Chae Chul-ho]
※ Please note: This article was translated by AI and may contain errors.