Incoming tax bombApartment owners in Seoul have been warned of a tax bomb. The government is poised to bump up the valuation of properties upon which taxes are levied.
Under the changes published by the Land Ministry, apartment valuations on average would go up by 14.2 percent this year, another double-digit increase after a 10.2 percent rise in 2018.
The values have shot up 25.8 percent when compared to 2017, and property taxes will go up likewise. If the government-set value exceeds 900 million won ($791,904) this year, homeowners are subject to the comprehensive property tax as well.
There are an estimated 70,000 properties falling into the double tax category. Owners paying state health insurance privately are charged in relation to their properties, which means that premiums would go up as well. Many could get insurance bills exceeding 1 million won.
The government maintains that the appraisal value inevitably goes up to reflect the housing price gains over the years. But retirees owning a single home are enraged as they face a jump in taxes and health insurance fees just for owning a home.
About 35 percent of homeowners in Seoul are 60 or older. When including people in their 50s, the ratio hovers at 60 percent. They face retirement or already have been pushed out of regular jobs. The government must come up with some kind of protection fast. There are some exceptions in the comprehensive property tax for long-time homeowners or aged people, but that is not enough.
Many people without regular incomes can’t pay higher property taxes or insurance premiums. The national pension cannot ease this as monthly payouts average 400,000 won.
Property taxes must be sharply lowered for long-time and elderly homeowners. The guidelines for charging health insurance premiums also must be rationalized to reflect regular income levels.
Authorities should consider fixing the private insurance system that charges premiums on property ownership, a rare system that cannot be found anywhere else in the world.
Transaction taxes should be eased so that homeowners can sell homes more easily. Home prices and the overall market could become more stable that way. The government said it was working on measures to protect elderly homeowners, but changes must be made before the bills start arriving.
JoongAng Sunday, March 16, Page 30