As the government carries out a "pinpoint overhaul" of the real estate tax system focusing on high-priced dwellings, non-residential dwellings, and multiple dwellings, tax burdens are expected to rise sharply in areas dense with high-priced homes such as Seoul's Gangnam. In particular, tax burdens will increase not only for owners of multiple dwellings but also for single-home owners the higher the price of their apartments. That is because the overhaul is designed so that the holding tax burden grows the more expensive the single owner-occupied dwelling is. From a market price of 3 billion won, the tax begins to be raised, and homes priced at 4 billion won or more saw a large increase in taxes.
Assuming the current rate of increase in the posted price, the holding tax next year for a person owning one 84㎡ unit of "ACRO River Park" in Banpo-dong, Seocho-gu, Seoul, is estimated to rise by more than 16 million won from this year. The holding tax on a 235㎡ unit at "Hannam The Hill" in Hannam-dong, Yongsan-gu, is analyzed to increase by more than 72 million won, approaching double this year's amount.
If a person with multiple dwellings owns three apartments in Gangnam, the holding tax burden rises by the hundreds of millions of won. Even if an apartment is not occupied, the holding tax burden nearly doubles.
◇ Higher tax burden for high-priced dwellings in Gangnam and Yongsan, lower for quasi-high-priced homes along the Han River belt
On the 3rd, ChosunBiz calculated the actual tax burden under the new overhaul through Woo Byung-tak, a senior adviser at Shinhan Premier Pass Finder, and found that the holding tax this year on an 84㎡ unit at ACRO River Park with a January market price of 5.1 billion won (posted price 3.491 billion won) is around 22.26 million won. However, reflecting the overhaul, next year's holding tax would rise to 33.33 million won—up 49.7% (11.07 million won)—assuming the posted price increase rate is half of last year's. If the posted price increase rate is the same as last year's, the holding tax would climb to 38.51 million won. That would be an increase of 16.25 million won (73%) in one year.
Under the same conditions, when calculating the holding tax for a 112㎡ ACRO River Park unit with a market price of 5.7 billion won (posted price 5.475 billion won), next year's holding tax under the new overhaul would be 61.41 million won, up 60.9% from this year's 38.15 million won. Under the current system, next year's holding tax would have been 45.51 million won. If the posted price increase rate is the same as last year's, the holding tax rises to 71.96 million won.
For a 235㎡ unit at Hannam The Hill in Hannam-dong, Yongsan-gu, the holding tax rises from 76.32 million won this year to 130.27 million won next year under the overhaul, an increase of more than 70%. If the posted price increase rate matches last year's, the holding tax burden increases to 148.59 million won, up 94.7% (72.27 million won) from this year.
By contrast, the holding tax burden was found to decrease for quasi-high-priced apartments in the 2–3 billion won range. The tax burden appears set to ease mainly along the "Han River belt."
For a 1-dwelling owner holding an 84㎡ unit at "Mapo Raemian Prugio" (posted price 1.752 billion won) in Mapo-gu, next year's holding tax under the current system would have been 5.56 million won, but applying the new system reduces it to 5.2 million won (assuming the posted price increase rate is half of last year's), down about 6.5% (360,000 won). Under the same conditions, for an 84㎡ unit of Raemian 4th in Dangsan-dong, Yeongdeungpo-gu, with a posted price in the 1.3 billion won range, next year's holding tax falls from 3.48 million won to 3.08 million won.
◇ Non-resident single-home owners and multiple-home owners face a "jump" in burden
The overhaul targets not only multiple-home owners but also single-home owners who do not reside in their property. Even for single-home owners, if they do not live in it, their holding tax burden becomes higher than that of owner-occupiers.
In particular, the comprehensive real estate tax burden is expected to rise sharply for non-resident single-home owners who own dwellings with a market price over 2 billion won (posted price over 1.4 billion won). That is because the long-term holding special deduction under the capital gains tax, which reduces the tax burden the longer the holding period, will be abolished in three years and only the residency-period deduction will apply, while the deduction cap, currently unlimited, will be reduced to 1 billion won. The basic deduction that lowers the tax base—the standard for levying taxes—will also be cut from a posted price of 1.2 billion won to 900 million won. The government said, "From next year, the comprehensive real estate tax for non-resident single-home owners will increase by up to four times, and by seven times from the year after next."
When simulating the combined holding taxes such as the comprehensive real estate tax and the property tax by complex, for a non-resident single-home owner who owns a 112㎡ ACRO River Park unit, next year's holding tax is 69.05 million won, about 12.4% higher than for an owner-occupied single-home owner (61.41 million won). This assumes next year's posted price rises by only half of last year's increase. Under the same conditions, a non-resident single-home owner of a 235㎡ Hannam The Hill unit faces a holding tax of 140.86 million won next year, 8.1% higher than an owner-occupier.
Quasi-high-priced apartments showed a similar pattern. For an 84㎡ Mapo Raemian Prugio unit, the holding tax burden for a non-resident single-home owner was about 49.4% higher than for an owner-occupier. For an 84㎡ Raemian 4th in Dangsan-dong, the holding tax burden for a non-resident single-home owner was 55.8% higher than when occupied.
For multiple-home owners, the holding tax burden increased the more expensive the dwellings they owned. If two Gangnam dwellings are owned, the holding tax burden roughly doubles next year and nearly triples four years later.
Assuming a two-home owner with an 84㎡ Eunma Apartments unit and an 82㎡ Jamsil Jugong unit, the holding tax rises from about 44.87 million won this year to 81.01 million won next year, up 80.5%. Even assuming the posted price rises by only half of this year's increase, the holding tax burden nearly doubles. If both homes are kept, the holding tax burden is projected to rise to 104.49 million won in 2028, 112.04 million won in 2029, and 116.46 million won in 2030.
However, even for two-home owners, if the home prices are relatively mid- to low-priced, the short-term increase in taxes appears smaller. For someone owning two units—an 84㎡ Hawangsimni Prugio I'Park and an 84㎡ Hanshin Hanjin Apartments in Donam-dong—the holding tax is expected to rise from 3.5 million won this year to 4.92 million won next year. Thereafter, the holding tax is expected to gradually increase to 6.08 million won.
For three-home owners, the holding tax burden grows even larger. For a three-home owner with a 112㎡ ACRO River Park unit, an 84㎡ Eunma Apartments unit, and an 82㎡ Jamsil Jugong unit, the holding tax rises from 201.27 million won this year to 282.66 million won next year, up 40.4%. The holding tax increases to 349.32 million won in 2028, 356.7 million won in 2029, and 362.04 million won in 2030, pushing the tax up by nearly 80% in four years.
◇ Capital gains tax also shifts to residency focus… Multiple-home owners get temporary easing of surcharges through the year after next
With the government restructuring the long-term holding special deduction around residency and changing it to a long-term residency income deduction, capital gains tax burdens are also expected to increase. Even with a long holding period, taxes rise if the residency period is short, and the burden grows as the deduction cap is reduced to 1 billion won even for long-term residents.
However, to provide an opportunity to sell dwellings, the government is temporarily easing capital gains tax surcharges on multiple-home owners in designated adjustment areas, so capital gains tax burdens for multiple-home owners are expected to decrease through the year after next.
If an 84㎡ Jamsil Els unit is acquired for 800 million won and, after meeting the 10-year holding and 2-year residency requirements, sold for 3 billion won, the additional tax for a two-home owner is currently 1.46643 billion won, but it becomes 1.11129 billion won next year and 1.22967 billion won in 2028. From 2029, the capital gains tax surcharge rate returns to the current level.
Under the same conditions for a three-home owner, the current additional tax is 1.70319 billion won, but it becomes 1.22967 billion won next year and 1.34805 billion won the year after next.