Apartment complexes are seen around Han River in Seoul on Monday. (Yonhap)
SEJONG -- The government’s move to levy comprehensive real estate taxes on a certain portion of homeowners is likely to face severe backlash, amid the growing tax burden of households in proportion to high growth in apartment prices.
According to the Ministry of Economy and Finance, those subject to the comprehensive real estate tax are people owning two homes or more -- whose collective property value, assessed by the Land Ministry, surpasses 600 million won ($506,000).
Homeowners will also become targets of taxation if their property value exceeded 1.1 billion won as of June 2021.
The tally of those subject to the tax this year is estimated at 947,000 -- 885,000 of those being individuals and the rest corporations or similar. This marked a 41.9 percent increase from the previous year’s 667,000.
The core issue is a surge in their tax burden, under which the 947,000 are supposed to pay 5.7 trillion won collectively this year, up 216 percent from 1.8 trillion won a year earlier.
As the tax authority began sending tax payment notices to households this week, a concerted move to resist the “heavy” taxation is seen among online commenters and civic groups.
More and more commenters are claiming that the comprehensive real estate tax, introduced during the Roh Moo-hyun administration (2003-2008), constitutes double taxation, as most households have already been paying property taxes. They argue it is unconstitutional.
Though the burden was eased during the Lee Myung-bak administration (2008-2013), the power of the comprehensive real estate tax has been enhanced again under the Moon Jae-in administration.
A civic group dubbed the People’s Coalition for Unconstitutional Real Estate Comprehensive Tax has unveiled a plan to file a petition with the Constitutional Court by mobilizing applicants for a joint action in the coming months.
Their action will undergo a series of proceedings such as filing complaints with the Tax Tribunal, filing an administrative suit and filing a petition with the Constitutional Court.
A real estate agent in Seoul predicted that the aggravated burden among homeowners will be transferred to tenants. “Price hikes will be feasible over monthly home rental fees or jeonse,” he said. Jeonse is Korea’s unique long-term rental system through lump-sum deposits.
A tax industry insider estimated that an individual who owns two apartment units each of 84 square meters in the pricy Gangnam-gu would pay about 80 million-100 million won in comprehensive real estate tax this year.
While the taxation target also includes those owning land, the spike in tax level is mainly due to record-breaking apartment prices, particularly in Seoul and neighboring Gyeonggi Province.
According to KB Kookmin Bank and Naver, the trading price of homes in Seoul posted 39.83 million won per 3.3 square meters as of Friday, up 19.2 percent from a year earlier. This indicates that the average price of an 84-square-meter home has reached 1.01 billion won in the capital.
Meanwhile, a senior official at the Finance Ministry said the comprehensive real estate tax does not apply to 98 percent of people, downplaying mounting worries.
By Kim Yon-se (email@example.com