Rapid Rise of Apartment Transfer Taxes

Beginning from April 4, the transfer income taxes, which are levied upon when apartment or tenement houses are sold, will rise substantially. The National Tax Service (NTS) announced on April 3 that `common housing standard current prices` of nationwide apartment households numbering 4,933,341, and tenement houses of 59,660 will be raised an average 9.7% to be applied beginning on April 4. The increase rate of this year is 5.9 percent point higher than the last year’s hike of 3.8 percent. When viewed by cities and provinces, Incheon, which has benefited from the opening of Incheon International Airport and the development of western coastal areas, has seen its transfer taxes raised the highest with 22.1 percent, followed by Seoul (16.5 percent), Kyounggi (15.3 percent), Pusan (8.9 percent), Taegu (8.3 percent), and Ulsan (7.3 percent). The common housing standard current prices is the basis for levying the transfer income taxes when house holders of one house resell apartments or other houses after holding between more than one year and less than three years, or house holders of more than two houses sell apartments or houses. In addition, the prices are used as the basis when inheritance taxes or donation taxes are levied upon.

Accordingly, taxes including transfer taxes, donation taxes, and inheritance taxes will be heavily levied upon holders of reconstruction-scheduled apartments in Kangnam area Seoul, whose adjusted standard prices hiked 47.4 percent.

Additionally, the tax burdens of common housing holders in Kwacheon City Kyounggi and Bundang, Ilsan, Pyoungchon, and Sanbon areas, whose standard prices adjusted a whopping 54.5 percent and between 15.8 percent and 19.2 percent respectively, are expected to increase substantially. The most highly priced standard rate among the nationwide apartment recorded by Hildesheim villa 160 Pyoung type in Dogok-Dong Kangnam-Gu Seoul, which been set as three billion sixty million Won, a raise of 900 million Won compared to the July 1st figure last year. In contrast, the BeomeoAjin 7 Pyoung type apartments in Beomeo-Dong Susong-Gu Taegu was set the lowest standard prices with a mere 4.5 million Won.

Director of properties taxes division of the NTS, Kim Bo-Hyeon said, `We have so far noticed the standard prices on every July 1 since 1998, but we have adjusted the prices three months earlier this year in order to calm down real estate speculation` and added, `We have not yet decided on whether to adjust the standard prices of common housing one more time this year.`

The standard current prices of common housing can be retrieved by sector, blocks, and houses in NTS home page at www.nts.go.kr..

Kwang-Am Cheon iam@donga.com