Comprehensive real estate tax notice for this year… The homeowner is a ‘shield’ with deductions, gifts, etc.

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As the National Tax Service plans to send a comprehensive real estate tax bill for this year to taxpayers on the 22nd, interest in this year’s property tax level is growing. In particular, the so-called ‘tax bomb theory’ is re-igniting after presidential candidate Yoon Seok-yeol, a candidate for People’s Strength, announced that he would consider lowering the property tax rate and abolishing the property tax for single-family households. However, it is analyzed that, if a small number of housewives are excluded, this year’s property tax will not be a big burden on households with one or two houses. Measures to reduce the tax burden on single-family homeowners are widely applied, and since multi-family homeowners have put up a ‘shield’ in advance through donations between families, the real estate tax may not be a ‘bomb’ but a ‘loose tiger’. First of all, the tax base for the property tax on a single-family house has changed from the previous one in that it has been raised from the published price of 900 million won to over 1.1 billion won. After the Democratic Party of Korea lost the Seoul mayor’s by-election in April this year, it was decided as a party, and in August the National Assembly revised the tax law after controversy, and many of the first-generation single-family homeowners were relieved of the tax burden. According to the Democratic Party’s Real Estate Special Committee, if the existing tax base (900 million won) was maintained this year, it was estimated that 854,000 people would be subject to the property tax, but it is estimated that 89,000 people will decrease as the tax base is raised to 1.1 billion won. The official price of 1.1 billion won is in the range of 1.5 to 1.6 billion won, and in the case of Seoul, most of the small and medium-sized apartments in overheated areas where house prices have risen significantly are included in the tax exemption. It is against this background that the first Vice Minister of Strategy and Finance Lee Won Lee of the Ministry of Strategy and Finance mentioned on the 19th that “98% of the people have nothing to do with the comprehensive real estate tax” and that “the concern is exaggerated”. The nominal tax burden will increase slightly as the tax rate for the first-generation householder who owns a house with a published price of more than KRW 1.1 billion will increase from 0.5 to 2.7 percent last year to 0.6 to 3.0 percent this year. However, the real estate industry analyzes that the actual tax burden is often reduced when considering the old-age deduction and long-term ownership deduction applied to one householder, one homeowner. Currently, the senior citizen deduction is 20-40% for those aged 60 and over, and the long-term holding deduction is 20-50% for those who have owned it for more than 5 years, and up to 80% of both can be deducted. For example, if a person aged 65 (30% deduction) owns a house for more than 15 years (50% deduction), the maximum limit of 80% tax credit is applied, which greatly reduces the tax burden. In addition, starting this year, even if a couple owns a house in the joint name, they can receive deductions for the elderly and holding period for the first time by selecting a special taxation option. For example, suppose a couple in their 50s owns a house with an official price of 1.5 billion won in the joint name and the holding period is 10 years. If the couple does not choose the special taxation exemption, taxation will be applied to the remaining amount (300 million won) after deducting 600 million won each, a total of 1.2 billion won, as before. If you select the special taxation option, 1.1 billion won is deducted and the remaining 400 million won is taxed, and you get a 40% discount on the long-term holding deduction. As such, in the case of a joint title holder, you can compare the special taxation and the tax amount when the existing method is applied. In the case of owners of two houses or three or more houses in a regulated area, such as an area subject to adjustment, the announced price increased compared to last year, and the tax rate (1.2 to 6.0%) also increased significantly. it is expected However, in reality, the analysis of the real estate industry is that this will only be a very small number. This is because, in the case of households with multiple houses, the practice of reducing the tax burden by distributing titles through donations between family members has already become common. Since the property tax is a per-person taxation principle, even if a spouse and children own three houses, one house each, they are not added together, but are taxed individually. This is also confirmed in the gift statistics. According to the Korea Real Estate Agency, the number of apartment donations nationwide from January to September this year amounted to 63,054. This is the second highest number since the collection of related statistics in 2006, following the number of donations from January to September last year (91,866 cases) (65,574 cases), when the number of apartment donations per year was the highest nationwide. By Choi Jong-hoon, staff reporter [email protected]

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