Comprehensive Real Estate Tax to Apply to Homes Valued at 2 Billion Won and Up; Heavier Burden for Non-Residents

[Anchor]

The government has announced this year's tax reform package. The core focus is on real estate taxes, with the main objective of increasing the tax burden on high-priced and non-resident homes.

For our first report today (August 4), here is reporter Jeong Seong-jin.

[Reporter]

The government cited fair taxation as the direction for this real estate tax overhaul.

The focus was placed on easing the burden for single-home owners who live in their own properties 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 for living, not just buying, we aim to establish a residence-centered housing market....]

Reflecting recent increases in housing prices, the threshold for the comprehensive real estate tax for single-home households will be raised from the existing official appraised price of 1.2 billion won to 1.4 billion won.

This is equivalent to a market value of about 2 billion won.

However, a clear distinction in tax burdens was made based on whether the owner actually resides in the property.

While the basic deduction for single-home owner-occupants will increase to 1.4 billion won, the deduction for non-resident single-home owners will actually be lowered from the existing 1.2 billion won to 900 million won.

For a house with an official appraised price of 1.5 billion won, the base amount for an owner-occupant after subtracting the basic deduction would be 100 million won, whereas for a non-resident, the base amount is 600 million won.

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

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

If the total official appraised prices of owned homes are the same, the same tax rate will apply whether a person owns one home or multiple homes.

Accordingly, for tax bases exceeding 1.2 billion won, the tax rates for owners of one or two homes will be raised to the level of existing multi-home owners by 2028.

The criteria for tax credits previously provided to single-home households will also be changed from the holding period to the residence period, and a 600 million won deduction limit will be newly established.

The upper limit on tax burdens, which was previously restricted to 1.5 times the property tax of the previous year, will also be raised to 2 times.

[Cho Man-hee, Deputy Minister for Tax and Customs at the Ministry of Finance and Economy: Our comprehensive goal is to enhance tax equity for housing above a certain value and to normalize property taxes on non-resident multi-home owners to curb investment and speculative demand....]

The revised plan estimates that about 363,000 housing units, representing the top 2.3 percent nationwide, will be subject to the comprehensive real estate tax, with an expected tax revenue effect of 800 billion won next year.

(Photo: Yonhap News)
Reported by Lee Jae-young | Video by So Ji-hye | Graphics by Lee Ga-jin
※ Please note: This article was translated by AI and may contain errors.