1.2 million to get comprehensive real estate holding tax bills

View of apartments in Jamsil from Lotte Tower. [YONHAP]

An estimated 1.2 million people will be getting bills this year for the comprehensive real estate holding tax.

It is the first time more than 1 million people have been charged the tax.

If the Democratic Party had worked with the government to adjust the tax, about 100,000 taxpayers would have been exempted, according to President Yoon Suk-yeol's office.

According to the Finance Ministry on Tuesday, those subject to the comprehensive real estate holding tax is up 29 percent. The total is 8.2 percent of Korea's 14.7 million homeowners.

The number of households taxed has more than tripled since 2017 despite the threshold for single homeowners being adjusted from 900 million won to 1.1 billion won.

The assessed value, which is based on previous year's apartment prices, rose 17.2 percent year-on-year. The assessed value is used for calculating taxation.

Apartment prices have been falling as interest rates are increased. The base rate increased from the historic low of 0.5 percent in May 2021 to 3 percent October 2022.

Some sellers have been unloading properties 30 percent below peak prices, with certain properties being sold below assessed value.

According to the Land Ministry, an 84-square-meter apartment at Jamsil LLL’s was sold for 1.95 billion won last month. The apartment’s assessed value this year was 1.98 billion won.

A similar apartment at a nearby complex in the same neighborhood was sold for 1.79 billion won last month. The assessed value of the apartment was 1.83 billion won.

Interest rates are expected to continue rising when the Bank of Korea meets on Nov. 24.

The government has been pushing for tax cuts in hopes of revitalizing the economy. This not only includes lowering the corporate tax to the pre-Moon Jae-in government levels but also addressing the comprehensive real estate tax.

“The difficulties that middle and lower income households will face next year including rising consumer prices will be harsher next year,” Finance Minister Choo Kyung-ho told the National Assembly last month. “The lowering of income taxes will contribute to the real income of such people, and we hope that the additional reserves will be used in spending.”

The government has proposed raising the bar on the comprehensive real estate holding tax from 1.1 billion won to 1.4 billion won for single homeowners for this year.

The DP, which is in a political standoff with the current administration, opposes the change.

“The government has discussed and pushed for various measures that would prevent the significant increase of people subject to the comprehensive real estate holding taxes due to the failed real estate policy of the previous administration,” said Lee Jae-myoung, deputy presidential spokesperson on Tuesday. “The government has proposed raising the taxable standard of apartments that are levied from 1.1 billion won to 1.4 billion won."

The comprehensive real estate tax is separate from the property holding tax levied by the district offices. The tax was first adopted in 2005 as a means to tame the overheated housing market.

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