Hundreds of Thousands Slapped with Higher Real Estate Tax

  • By Ahn Joong-hyeon

    November 26, 2020 11:43

    The number of people slapped with punitive real estate taxes increased by more than 25 percent this year. The government's failed attempt at taming real estate speculation resulted in soaring apartment prices and property taxes for hundreds of thousands of homeowners.

    According to the National Tax Service on Wednesday, 744,000 people must pay comprehensive real estate holding tax this year, up 149,000 from last year. Total comprehensive tax to be collected amounts to W4.27 trillion, up 27.5 percent on-year (US$1=W1,108).

    In 2016, a year before President Moon Jae-in took office, only 339,000 people were subject to comprehensive tax totaling W1.72 trillion. But over the last four years, their number increased 2.2 times and the amount 2.5 times.

    This is due to a sharp increase in apartment prices while the cutoff point that defines an "expensive" property remains the same at just W900 million. All taxes collected on apartments have jumped 42.9 percent to W1.81 trillion, and the number of owners who are subject to them rose 28.3 percent to 667,000.

    In Seoul alone, their number increased by 95,000 to 393,000 people. Since there are 2.46 million homeowners in Seoul, one out of six of them have to pay punitive taxes.

    Nationwide, the declared value of homes increased 5.98 percent this year, but in affluent Gangnam it jumped 25.53 percent, in Seocho 22.56 percent and in Songpa 18.41 percent, causing the average declared value of homes in the capital to rise 14.73 percent.

    Prices also jumped disproportionately in other parts of the capital with Mapo up 12.30 percent, Yongsan 14.5 percent and Seongdong up 16.22 percent. That means the number of people in the capital subject to punitive taxes rose by almost 100,000 this year and the amount of taxes 43 percent to W1.19 trillion.

    Homeowners who were notified of tax hike are in uproar. A petition on the Cheong Wa Dae website complains that the government is infringing the rights of retirees to own homes, and has garnered more than 2,000 signatures.

    The person who posted the petition asked, "I paid acquisition and property taxes and also have to pay taxes when I sell my apartment, so why do I have to pay such a hefty real estate holding tax? Must pensioners like me work until they die to pay these taxes?"

    Real-estate-themed chat groups were also filled with comments by people complaining that their tax burden quadrupled this year. Some said they will have to sell their apartment to pay the tax on it.

    And this is not the end. Next year real estate taxes will rise even further. A bill passed by the National Assembly in August hikes the rate from 0.5-3.2 percent this year to 0.6 to six percent in 2021. The government is also trying to hike the declared value of homes to reflect market rates, resulting in an even greater burden for homeowners.

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