The taxation system for the Comprehensive Real Estate Holding Tax is shifting its focus from the number of homes owned to the total value of the properties.

The tax rates will be unified based on the previous multi-homeowner standards and will be raised starting from the tax base bracket exceeding 600 million won.

The threshold for the comprehensive real estate holding tax for single-home households will be relaxed from an official appraised value of 1.2 billion won to 1.4 billion won.

The basic deduction for single-home owners will be expanded from 1.2 billion won to 1.4 billion won for actual occupants, but reduced to 900 million won for non-occupants.

The government announced the 2026 Tax Reform Plan containing these measures.

The biggest change in this tax reform is that the criteria for applying tax rates will shift from the "number of homes" to "property value."

This is intended to alleviate the preference for a single high-value home, a phenomenon where demand concentrates on a single prized property.

However, the number of homes owned will still indirectly affect the tax burden because differentiations based on the number of homes remain applied to the basic deduction amount and the fair market value ratio used to calculate the tax base.

According to the reform plan, while heavy tax rates of 2.0% to 5.0% were previously applied only to multi-homeowners with three or more properties exceeding a tax base of 1.2 billion won, the same tax rates will now be applied according to the value regardless of the number of homes.

Accordingly, tax rates will increase across tax base brackets.

The tax rates will be raised respectively: from 1.3% to 2.0% for the 1.2 billion to 2.5 billion won tax base bracket, from 1.5% to 3.0% for 2.5 billion to 5 billion won, from 2.0% to 4.0% for 5 billion to 9.4 billion won, and from 2.7% up to a maximum of 5.0% for the bracket exceeding 9.4 billion won.

To alleviate the threshold effect where the tax burden surges upon entering the heavy tax rate bracket, the tax rate for the 600 million to 1.2 billion won tax base bracket will also be raised from the current 1.0% to 1.3%.

However, to prevent a sudden surge in tax burdens, the increase in tax rates for brackets of 1.2 billion won and above will be implemented gradually.

Next year, intermediate tax rates (0.5% to 3.5%), which are 0.2 to 0.8 percentage points higher by bracket, will be applied first, and heavy tax rates will be fully applied starting in 2028.

To reflect the effect of the increased tax rates, the tax burden ceiling ratio, currently set at 150%, will be raised to 200%.

The targets for the comprehensive real estate holding tax and the basic deduction amount will be adjusted to focus on actual home occupiers.

The taxation threshold for single-home households will be relaxed from the current official appraised value of 1.2 billion won to 1.4 billion won.

This equates to a market price of about 2 billion won, placing it in the top 2% bracket.

Deduction benefits will be applied differentially depending on occupancy status.

For single-home households who actually reside in the home, the basic deduction amount will be raised from 1.2 billion won to 1.4 billion won, whereas for non-occupants who do not reside there, it will be lowered from the existing 1.2 billion won to 900 million won.

Multi-homeowners will maintain the current standard of taxation when the total sum of the official appraised values of their owned homes exceeds 900 million won (a market price of about 1.3 billion won).

Multi-homeowners will also be subject to differential basic deductions.

Out of the current 900 million won basic deduction, only 400 million won will be applied fundamentally, and the remaining 500 million won will be deducted only in proportion to the share that the "residence home" value accounts for within the total sum of all property values.

The fair market value ratio, which is currently 60%, will also be raised step-by-step to realize the tax base.

For owners of three or more homes or owners of homes in adjustment target areas (excluding single-home households), it will rise to 70% next year and then to 80% in 2028, while for other taxpayers, it will rise to 70% starting next year.

The tax credit system previously granted to single-home households will also be completely overhauled to focus on "residency."

Previously, up to 50% was deducted for holding a property for 15 years or more regardless of residency, but moving forward, it will be converted to deductions based on the "period of residence."

Specifically, deduction rates of 20% for 5 to 9 years of residence, 40% for 10 to 14 years, and 50% for 15 years or more will be applied.

To ensure a gradual transition and settlement, the existing holding deduction will be cut in half next year, and a buffer mechanism will be put in place so that taxpayers can receive whichever is the greater amount between the residency deduction and the holding deduction.

To prevent excessive benefits for higher-value homes through uncapped tax credits, a ceiling on deduction amounts will also be newly established.

A limit of 8 million won will be applied next year, and a limit of 6 million won will be applied step-by-step starting from 2028.

The deferred payment system for the comprehensive real estate holding tax will be expanded for actual consumers lacking cash liquidity.

The income requirement allowing single-home owners to defer payment until the time of real estate disposal will be relaxed by 10 million won, from an annual gross salary threshold of 70 million won to 80 million won or less (and comprehensive income from 60 million won to 70 million won or less).

A deferred payment target for elderly and resident taxpayers will also be newly established.

Payment deferral will be permitted for those aged 65 or older who have resided in the home for 10 years or more, and whose property holding taxes (property tax and comprehensive real estate holding tax) for the current year account for 10% or more of their income from the previous year.

Incentives will also be granted to taxpayers utilizing guarantee insurance policies for tax payment deferrals by exempting them from interest-equivalent surcharges on deferred payments up to the limit of the guarantee insurance premium.

(Photo: Yonhap News)