Heavier Tax Burden for Expensive City Home Owners

The government has priced some 5.86 million detached, multifamily homes and small to middle-sized tenements that have private living areas under 165 square meters (approximately 50 pyong) from across the nation for the first time.

Along with the apartments and large-sized tenements with private living areas over 50 pyong in which the National Tax Service sets the tax standard value, the market price of some 12.585 million homes over the country are now established.

The Ministry of Construction and Transportation (MOCT) said on Friday, April 29, that the market prices of 5.86 million homes, 4.19 million detached, multifamily homes, 1.32 million multi-residence homes, and 350,000 small to middle-sized tenements, will be announced on April 30.

The posted housing prices will become the standard for levying property taxes, acquisition registration taxes and capital gains taxes. The acquisition registration taxes will apply this standard beginning May 1, and the property taxes use this standard starting in July.

The new housing rates are to reflect about 80 percent of the current market prices, and those living in costly homes in the metropolitan area will have a heavier levy on related taxes. However, it seems to show that the tax burden for those living in inexpensive homes in the provincial areas will lighten.

The most expensive house nationwide is the detached home of Samsung Group Chairman Lee Kun-hee in Itaewon-dong, Yongsan-gu, Seoul, which is priced at 7.44 billion won.

Among the multi-residence homes, the highest priced is an 87.1-pyong home in Cheongdam-dong, Gangnam-gu, Seoul, set at 1.463 billion won. On the other hand, a four-pyong home in Doyang-eub, Goheung-gun, Jeonnam Province was priced the lowest at one million won.

MOCT will be receiving objections until May 31, and after reinvestigating and resetting prices, the final adjusted prices will be posted on June 30.

MOCT announced that if an objection were filed, there would be a personal interview with the homeowner, along with a detailed reinvestigation into the home such as a visit and examination at the actual home site.

Sang-Rok Lee myzodan@donga.com