Creation of 'Ultra-Luxury Housing' Tier and 3-Step Differentiation... 'Long-Term Holding Deduction' Overhaul Inevitable

Following the president last week and a public debate chaired by the prime minister today (July 27), the government has entered the final stages of preparing its tax reform package. With the strong consideration of establishing a separate standard for ultra-luxury housing, changes are also expected in the scale of households subject to the comprehensive real estate holding tax and their tax burdens.

Reporter Baegun has the story.



If the plan to set a separate standard for ultra-luxury housing is finalized, three major groups will be formed from the perspective of the comprehensive real estate holding tax.

Currently, those below the basic deduction thresholds—1.2 billion won for single-home owners and 900 million won for multi-home owners based on official public appraisal values—do not pay the comprehensive real estate holding tax, while those above are taxed.

If an ultra-luxury benchmark is established, the bracket above the deduction line will be divided into two groups. The section between the basic deduction line and the ultra-luxury threshold is expected to maintain current tax burdens or see a modest increase.

Ultra-luxury housing is expected to face higher tax burdens through methods such as raising the fair market value ratio or adjusting tax rates.

For the ultra-luxury housing standard, market values ranging from 3 billion won to 5 billion won are being discussed, which corresponds to public appraisal values of roughly 2.0 billion won to 3.0 billion won.

Along with this, considering recent increases in housing prices, the government is also reviewing a plan to slightly raise the basic deduction threshold for single-home owners from 1.2 billion won.

It is widely discussed that basic deductions and heavy taxation rates, which have been divided based on the number of homes owned, could be shifted to criteria based on the total value of the properties held.

Currently, a person owning a single apartment worth 3 billion won and a person owning three apartments worth 1 billion won each have the same total property value, but the multi-home owner receives fewer deductions and faces separate heavy tax rates, resulting in higher taxes.

This has been targeted for reform due to pointed criticisms over equity issues in taxation and an intensifying concentration of demand on a single high-value property.

The capital gains tax long-term holding special deduction is also subject to revision.

National Tax Service Commissioner Lim Kwang-hyun pointed out that there was a case where more than 20 billion won was deducted upon selling a single house in Gangnam, Seoul, noting that the current system favors owners of high-priced homes.

Consequently, possibilities include setting a deduction cap for ultra-luxury housing or lowering the deduction rates.

In addition, the actual period of residence is expected to be reflected more actively in the deduction rates rather than just the holding period, thereby lowering deduction rates for properties held for investment or speculative purposes.

[Kim Yong-beom, Cheong Wa Dae Chief of Policy (CBS Radio 'Park Sung-tae's News Show'): Setting a cap on the long-term holding deduction, and for multi-home owners, shouldn't we provide some exit routes so they can put their properties on the market if property holding taxes are strengthened?... We are pondering ways to properly reflect such opinions in our policies.]

Reflecting opinions gathered from two public debates, the government plans to announce its tax reform package early next month.

(Video Editing: Kim Jin-won, Design: Jang Chae-woo, Lee Ga-jin)
※ Please note: This article was translated by AI and may contain errors.