Increase of Property Tax at Less 50%

A property tax of an apartment of which price exceeds KRW 0.3 billion as a standard market price of National Tax Service (NTS). An increase rate will be estimated at below 50%.

The government will have a meeting participated by the Ministry of Finance & Economy (MOFE), Ministry of Government Administration and Home Affairs (MOGAHA), Ministry of Construction & Transportation, Ministry of Education & Human Resources Development and local governments. Then, it will announce a comprehensive countermeasure for a real property market stability including an intensive increase of property tax of luxury apartments in metropolitan areas.

Jeon Yun-cheol, the Deputy Premier and the Ministry of Finance & Economy said on September 3, “We will prevent a speculation of real property by mobilizing maximum administrative abilities. We will take the stern measure for the speculation control by September 5.”

The Deputy Premier added, “When the property tax increases, there is an effect to restrain the speculation by dropping the will to own the real property. We will increase the tax base on property tax.”

Officials of MOFE and MOGAHA said “If we increase the tax base on national property

tax at once, people will protest over taxes. We will increase the property tax by

adjusting a mark-up of certain buildings.”

The mark-up of certain buildings is the system used when the market price standard amount(tax base on property tax) is determined as follows; △2% for the apartment house of which standard price is between 0.3 billion won and 0.4billion △5% for the apartment house of which standard price is between 0.4 billion and 0.5 billion, △10% for the apartment house of which standard price is above than 0.5 billion.

The government has been reviewing the measure that increases a gap of tax base between apartments in areas of high public land price and in areas of low public land price.

Because the gap is just 50%, it doesn’t reflect the gap of the public land price at all. The public price of the house land shows the difference of 7250 times between the maximum price and maximum price.

The government will increase an actualization rate of the tax base on property tax by

increasing the standard price on new buildings applied to the base tax on the national

property tax steadily.

Kwang-Hyun Kim Kwang-Am Cheon kkh@donga.com iam@donga.com