Starting October of Next Year, 60,000 People Will Pay Comprehensive Real Estate Tax

From October 2005, an individual or corporation in possession of housing with a market price of over 900 million won or land with an official land price of over 600 million won will have to pay comprehensive real estate tax.

Also, if you own land used for business with an official land price of over four billion won, you are also subject to comprehensive real estate tax.

The number of those subject to this taxation is presumed to be approximately 60,000, and they are expected to pay up to 50 percent more for possession taxes such as comprehensive real estate taxes.

The government and the Uri Party held a high-ranking party-government consultative conference on November 4 and announced that such revised real estate possession taxes would be decided on with the National Assembly’s approval during this year. It will be enforced by next year.

However, it was agreed that the tax rate would be settled on by early next week through simulation.

To prevent a sudden increase in the burden of comprehensive real estate tax, the government and the Uri Party have decided to place an upper limit so that the possession tax for next year will not increase over 50 percent more than this year’s possession tax, and so that even after 2006, it will not exceed a 50 percent increase.

The local tax collected by the city-county-district before the comprehensive real estate tax was imposed will now be coordinated under the name of the property tax.

As a result of the tax reform, the increase of next year’s tax collection is assumed to be 320 billion won, 10 percent of this year’s tax collection of 3.2 trillion won.

As the burden of possession tax will increase for next year, the government and the Uri Party have decided to revise the local tax law and lower the real estate registration tax by one percent.

Hence, from next year, the amount of transaction tax you need to pay for buying real estate will decrease from 5.8 percent (acquisition tax, registration tax, and value added tax included) to 4.6 percent.

In addition, with the revision of the real estate brokerage law in next year’s second half, the burden of transaction taxes will increase, and it has been decided that the local tax law will be revised to lessen the burden by exempting the amount of taxes that has increased.

Ji-Wan Cha Young-Hae Choi cha@donga.com yhchoi65@donga.com