98% of Koreans won’t be affected by higher comprehensive real estate tax: ministry

 

Most taxpayers will not be subject to the comprehensive real estate holding tax, which was earlier raised to prevent speculative property purchases, the government said Friday in a bid to ease growing public concerns as this year’s payment period approaches. 

“Criticism has risen that a large number of ordinary people will be charged with higher rate taxes. As for such exaggerated concerns, I would say bills of comprehensive real estate holding taxes will not be delivered to 98 percent of the nation’s population,” First Vice Finance Minister Lee Eog-weon said. 

Starting June, the government began to impose a comprehensive real estate tax in a range between 1.2 percent and 6 percent, sharply up from the previous 0.6 to 3.2 percent range. The hike was targeted at homeowners with two or three houses located in some speculative areas that have a combined value of 600 million won ($507,000) each.

The regulatory move was part of the Moon Jae-in administration’s 22nd batch of real estate regulations announced in July last year to put a brake on property speculation, which authorities sought to blame for the sizzling housing market.

The government is expected to collect 5.1 trillion won in comprehensive real estate holding tax this year, up 62 percent from last year, while the number of taxpayers would rise by 100,000 to 765,000, according to data from the Ministry of Economy and Finance. 

The government has been under pressure to soothe growing public discontent and criticism from the political circle over tax burdens on single-home owners.

Addressing the issue, Lee noted the government has lowered the real estate tax burden for single-home owners by raising the tax base for a comprehensive real estate tax imposed on single-home owners. In late August, the ruling Democratic Party of Korea proposed a bill to lift the minimum threshold for comprehensive real estate tax from the existing 900 million won to 1.1 billion won for homeowners without second homes, which gained parliamentary approval in September.

Meanwhile, a bill of comprehensive real estate holding tax is scheduled to be sent out to taxpayers on Monday. The payment should be made between Dec. 1-15, according to the National Tax Service.

By Choi Jae-hee (cjh@heraldcorp.com)