With home prices rising, the officially assessed values have jumped sharply, increasing the burden of property holding taxes. The following are the government's announced measures to toughen holding taxes. In and outside the market, the most likely option being discussed is to raise the "fair market value ratio (fair ratio)" applied when calculating the comprehensive real estate tax imposed on owners of high-value property.
The key is the tax overhaul for "single-dwelling owners of ultra-high-priced or non-residence dwellings." Because holding tax regulations to pressure multi-home owners to list properties were implemented under Moon Jae-in, policy tools can be anticipated, but there is no precedent for regulations on single-home owners. Experts see the possibility that the overhaul will include lowering the basic deduction for the comprehensive real estate tax and reducing credits for seniors and long-term holding.
According to government circles on the 20th, the government is reviewing a plan to raise the fair ratio in the second half of this year. A Ministry of Land, Infrastructure and Transport official said at a briefing on the draft officially assessed prices of multi-family dwellings for 2026 that the fair ratio "is being reviewed by the Ministry of Economy and Finance, the tax authority."
Holding taxes (property tax and the comprehensive real estate tax) are calculated by multiplying the officially assessed value by the fair ratio to set the tax base (the basis on which tax is levied), then multiplying that by the bracketed tax rates. If the fair ratio rises, the tax base increases and taxes go up. The current fair ratio for the comprehensive real estate tax is 60%, while for property tax it is 43%–45% for one household with one dwelling and 60% for multi-home owners. While leaving property tax, which applies to all dwelling owners who fall under taxation, as is, a plan to raise the comprehensive real estate tax fair ratio to as high as 80% is being prominently mentioned.
Park Hap-soo, an adjunct professor at Konkuk University's Graduate School of Real Estate, said, "I think the government is highly likely to raise the comprehensive real estate tax fair ratio to increase the burden on owners of high-priced dwellings," adding, "With officially assessed prices surging, holding taxes in areas like Gangnam, Seoul, are already expected to jump by 40%–50%, and if the fair ratio is raised as well, the burden on owners of high-priced dwellings will be considerable." The fair ratio was fixed at 80% from its introduction in 2008 until 2018, but under Moon Jae-in it was raised to 95% in 2021 and later lowered to 60% under Yoon Suk-yeol.
What the market is watching most closely is the tax law amendment to be announced at the end of Jul. A plan to subdivide the tax base brackets is being discussed first. Kim Yong-beom, the Blue House policy chief, said in an interview in Jan., "There is a proposal that holding taxes, like income taxes, should have more finely grained tax base brackets, and it is something to seriously review." The comprehensive real estate tax's tax base brackets are divided into ▲ 300 million won or less ▲ 600 million won or less ▲ 1.2 billion won or less ▲ 2.5 billion won or less ▲ 5 billion won or less ▲ 9.4 billion won or less ▲ over 9.4 billion won. Kim said there are opinions that the 2 billion–4 billion won range should be made more granular.
Going further, there is also speculation that the rates themselves could be touched. President Lee Jae-myung said at the end of last month, "Ultra-high-priced dwellings will face burdens and regulations commensurate with those in the capitals of advanced countries," hinting at the possibility of raising the effective holding tax rate, which is currently in the 0.1% range.
He also mentioned "single-dwelling owners for investment or speculation," saying, "We will set the various regulations and burdens with single dwellings for actual residence as the baseline, and add fine-tuned weights depending on whether it is used as a residence, the number of dwellings, the price level, and other factors." This was interpreted to mean that single-dwelling owners of ultra-high-priced or non-residence dwellings are also within the government's regulatory scope, and Minister Kim Yun-duk of the Ministry of Land, Infrastructure and Transport later formalized this in an interview. Asked whether single-dwelling owners of ultra-high-priced or non-residence dwellings are included in the holding tax overhaul measures, Minister Kim said, "Of course they are," adding, "There is also the issue of 'one smart unit,' and I think there must be strong government measures, including non-residence single dwellings, and we are currently preparing them." When asked whether the burden of holding taxes will rise, Kim said, "Yes."
In the market, options being discussed include lowering the basic deduction (1.2 billion won) applied to one household with one dwelling depending on residence status, or reducing tax credits for seniors and long-term holding. Under the current system, a single-dwelling owner aged 60 or older can receive a senior credit of up to 40%. In addition, with long-term holding of 10 years or more (if the two-year residence requirement is met), it is possible to reduce the tax by up to 80% when combined with the senior credit. If the credit rates are lowered, the effective holding tax rate for non-residence single dwellings will inevitably rise sharply. Nam Hyuk-woo of the Woori Bank Real Estate Research Institute said, "It may also be possible to consider measures such as adding residence requirements to the definition of a one-household, one-dwelling owner as specified in law."
However, some argue that if the tax burden on single-dwelling owners is strengthened, tax resistance will be greater than during regulations on multi-home owners. An industry official who requested anonymity said, "In other advanced countries where the effective holding tax rate is close to 1%, there is almost no capital gains tax. But if we apply advanced-country cases as is to Korea, where capital gains taxes are substantial, the result will be a lock-in effect on listings," adding, "In the end, landlords will convert jeonse to monthly rent and raise monthly rents as a form of tax resistance, and tenants will inevitably bear the brunt."