Posted January. 14, 2005 22:44,
On January 14, for the first time, the government has settled the public market price of detached houses, which will be the standard for various taxes such as acquisition, registration, and property taxes.
The public market price of detached houses is 80 percent of the actual transaction price, and as various housing-related taxes will be levied on the basis of this price, transaction taxes (the sum of the acquisition tax and registration tax) are expected to increase by an average of 5 to 10 percent. Additionally, it is anticipated that there will be quite a few detached houses with over a 30 percent increase in transaction taxes.
Considering that in the past the government openly declared that while increasing possession taxes through means such as aggregate land taxes, they would decrease transaction taxes, there is a possibility of taxation resistance due to the actual increase in transaction taxes.
Beginning this May, the Ministry of Construction and Transportation (MCT) has decided to introduce the system of publicizing housing prices, which will assess the price of detached housing by adding the price of the building and land, and in the interest of this system they have publicized the public market prices of 135,000 standard houses.
With this as a base, the MCT is planning to publicize the individual prices of 4.5 million detached houses, apartments and town houses on April 30.
Taxation specialists have analyzed that if the taxation standard (the standard amount for levying taxes) is increased from half of the actual transaction price to 80 percent of the market price, then, even if the tax rate is reduced, the burden of taxes will increase for the most part.
For instance, the public market price of a three-story detached house situated in Banpo-dong, Seocho-gu, Seoul, with a total space of 124 pyong was settled at 568 million won. Starting this May, the acquisition and registration taxes for this house will rise by 35.2 percent (5,915,000 won) to 22,720,000 won compared to last years 16,805,000 won.
On the other hand, among the sample of 135,000 detached houses in this research, the most expensive house turned out to be the 92-pyong UN Village of two stories and a basement situated in Hannam-dong Yongsan-gu Seoul, which was evaluated at 2,720,000,000 won.
Among the different sectors, Gangnam-gu had the highest average price of detached houses at 862,590,000 won, five times that of Gangbuk-gus, which is 172,980,000 won. Construction and Economy Institute Junior Researcher Kim Hyeon-ah said, As the increase of transaction taxes is contrary to the declaration of the government, a decrease in transactions is expected, and added that, The grounds for determining the public market price of detached houses will also be hard to secure.