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New Real Estate Tax Questions Answered

Posted November. 22, 2005 08:34,   


Are officetels, mixed buildings, and unlicensed residences subject to the Comprehensive Real Estate Tax?

“The Comprehensive Real Estate Tax in principle only applies to residences. If officetels, mixed buildings, and unlicensed residences are in fact being used for residential purposes, then they will be considered as individual residential possessions, and if their prices in sum surpass 900 million won, they will have to pay the tax. If they are not for residential purposes, only the price of the land where the building is situated will be calculated, and if the price of land that one possesses is higher than 600 million won, then the real-estate tax will be levied.”

What are the requirements to become a leased house, which are exempt from taxes?

“Houses smaller than 25.7 pyong leased for over 10 years should be registered to regional offices and tax offices before June 1, the date when taxes are levied on homeowners, such as a house leasing entrepreneur. In order to be exempt, one has to have over five houses each costing less than 300 million won.”

Is there a ceiling on the real estate tax?

“The sum of property taxes and comprehensive real estate taxes cannot be greater than 150 percent of the past year’s property tax. If one did not own real estate the year before, and owns it this year, and has not paid property taxes, then it will be the property tax that would have been paid for the current house that will be used to see whether or not the taxes surpass 150 percent.”

What if the real estate is jointly owned by spouses?

“The comprehensive real estate tax is levied on real estate owned by individuals, so if it is jointly owned, then one can reduce taxes by a small margin. However, in the process of changing property from individual ownership to joint ownership, one will have to pay property donation, acquisition, and registration taxes. So compare the amount of saved taxes with the taxes to be paid and choose the one that best suits you.”

Is individually owned farmland also subject to the tax?

“The Comprehensive Real Estate Tax on land is only levied on class “Na” land that costs over 600 million won, and commercial land that costs over four billion won. Hence, farmland is not subject to the tax. However, farmland located in urban residential, commercial, and industrial zones will have to pay taxes if they cost over 600 million won, even if they are being used for agricultural purposes.”

Is land under reconstruction also subject to comprehensive taxing?

“If the construction company has received permission for a certain purpose, and it is being used for that purpose, than it will be exempt from taxing. However, if a mixed building with residential and commercial spaces is being built, and it costs over four billion won, then it will be subject to taxation.”

What types of buildings are exempt from comprehensive taxation?

“Real estate used for public good projects or religious buildings by non-profit owners, and temporary building that are not over one-year old at the time of taxation are exempt from taxation.”

Where should one report and pay the taxes?

“Report until December 15 to tax office, and pay the taxes at banks or post offices.”

Eun-Woo Lee libra@donga.com