| A passenger walks by a real estate office in Seoul on May 12. Newsis |
By Anna J. Park
The Yoon Suk-yeol administration is moving to ease the tax burden that increased during the previous administration, including overhauling the housing tax system to lower taxes levied on home owners. The main opposition party is also campaigning to lower the comprehensive real estate tax levied on the owners of expensive homes, ahead of the June 1 local elections.
According to authorities on Monday, the government is currently mulling over lowering housing taxes back to 2020 levels. The new administration is also expected to lower comprehensive real estate taxes levied on households that own only one home to the tax level imposed in 2021, but now it seems almost certain that the government aims to lower it further to the level in 2020.
With the rapid increase in real estate prices over the past few years, the declared value of apartments nationwide, or the state-assessed price which provides the ground for the imposition of housing taxes, rose by 19.05 percent in 2021 alone and increased 17.22 percent in 2022. The declared prices of apartments nationwide increased five percent for three years from 2018 and 2020.
Considering the housing price surges in 2021 and 2022, the government's plan to turn back housing taxes to 2020 levels signifies that the sudden increase in the housing tax burden due to soaring declared values during the past few years will almost disappear for taxpayers.
"Taxpayers have been seriously burdened by real estate price hikes due to a series of wrong policies as well as the increase in declared prices. The Yoon administration aims to lower their comprehensive real estate tax burden to the level imposed in 2020," Finance Minister Choo Kyung-ho said in an interview with a local media news outlet earlier this month.
The government is also likely to ease corporate taxes as Choo vowed that the administration will free the business sector from "chains and sandbags." According to the Korea Economic Research Institute, the highest corporate tax rate rose by 3 percentage points in Korea during the past five years, while some other developed economies including France, the U.S., and Japan lowered their rates.
The government is also examining an option of reducing the possession tax levied on a single household that only possesses only one home. The Yoon administration is expected to announce a new set of real estate tax schemes within this month.
Regarding such moves, the main opposition party has also begun campaigning to lower the comprehensive real estate tax burden as one of its campaign pledges, ahead of the local elections set for June 1.