Property owners are feeling the tax pinch

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Property owners are feeling the tax pinch

Published: 24 May. 2021, 16:27

View of apartrment in Seoul from Mount Namsan on Sunday. As the government assessed value rose, tax burden have increased, increasing the number of people asking for paying property taxes in installment. [YONHAP]

More people are asking to pay property taxes in installments after the government drove up both taxes and assessed values of properties.

According to People Power Party (PPP) lawmaker Kim Sang-hoon on Monday, the number of people asking to pay property taxes in installments in Seoul last year amounted to 1,478 -- six times larger than the 247 requests made in 2019.

In 2016, the number of requests was 37. A year later, when the Moon Jae-in government took office, the number increased to 49. In 2018, it nearly tripled to 135.

Under current law, property taxes over 2.5 million won can be paid in two consecutive monthly installments.

Kim's study was based on data provided by the Seoul city government.

This year, the figure could really shoot up after assessed values of properties spiked compared to a year ago.

The average assessed value for an apartment in Korea rose 19 percent in 2021, the sharpest year-on-year increase in 14 years. In 2007, the value rose 22.7 percent under the Roh Moo-hyun administration.

The sharpest increase of 70.7 percent was seen in the administrative city of Sejong, followed by Gyeonggi with 24 percent, Daejeon with 20.6 percent.

In Seoul, the assessed value increase averaged 19.9 percent compared to last year’s 14.75 percent. This year’s was the sharpest increase since 2007's 28.4 percent.

This year, the government applied 70.2 percent of the market value of an apartment as its assessed value for the sake of taxation, a 1.2 percentage point increase from 2020’s 69 percent.

The government plans to raise that ratio to 90 percent by 2030.

The higher assessed value also increases costs for subscribers to regional national health insurance, which is what coverage is called when premiums are not covered by employers. Such people, including self-employed business owners and even retired people, have premiums calculated based on the value of their assets including property.

People whose health insurance is covered through relatives lose that status if the value of their assets exceeds 540 million won. Then they have to pay their own health insurance premiums.

According to the National Health Insurance Service, 510,000 people lost their dependent status last year. Some 3.3 percent or 17,000 lost it due to increases in their asset values.

Both the ruling and opposition parties are working on plans that would reduce taxes, especially for people who owns a single residence.

“While we will maintain the overall framework and direction of our real estate policies, we will listen to the views of the private sector and discuss with political parties areas that need to be changed,” Finance Minister Hong Nam-ki said during a government real estate meeting last week. “In order to quickly end uncertainties caused by debate over real estate policy changes, we will, if possible, announce measures by next month.”

The ruling party lost by-elections in Seoul and Busan last month largely as a result of the government’s failed real estate policies.

During a press conference earlier this month, President Moon Jae-in mentioned real estate as his biggest failure.

“The last by-election defeats were a severe punishment for the [real estate] failure,” Moon said at a press conference held at the Blue House on May 10.

BY LEE HO-JEONG [lee.hojeong@joongang.co.kr]