A Lesson in Survival From the Finance Minister
The real estate tax burden this year will rise for 7.38 million households or 76 percent of the 9.7 million apartments, condominiums and villa complexes across the country. The 9.7 million will pay W85,000 (US$1=W945) in combined property tax per household on average this year, up about 12 percent (W9,000) from last year, the Ministry of Government Administration and Home Affairs said Thursday. The increase is small, the government explained, because property taxes for households worth less than W600 million in government-set value, which are not subject to combined real estate tax, are limited to a rise of no more than 10 percent. But as the government plans to raise real estate tax from the current 50 percent of publicly assessed value to 100 percent by 2017, the burden is also expected to rise for householders not subject to combined real estate tax.
◆ A rise of less than W10,000
According to the data the ministry released Thursday, of the 7.38 million households, 81.5 percent will see the burden rise less than W10,000, 10.7 percent between W10,000 and W50,000, and 7.7 percent more than W50,000.
The government adopted a discriminatory policy of setting higher tax increase rates for households subject to combined estate tax, to the extent that it deserves the title “tax bomb,” and lower rates for those not subject to the combined tax. Real estate tax rises up to 5 percent from last year for homes worth less than W300 million in government-set value and up to 10 percent for homes worth W300 million-W600 million, In contrast, real estate tax can rise up to 50 percent for households worth W600 million or more. Households in the latter category are expected to bear a considerably larger property tax burden as the tax reflection rate is set to gradually increase to 100 percent of the home’s value by 2017.
◆ No correction in combined real estate tax
The Finance Ministry tabulates households required to pay combined real estate tax for land and houses including corporations at 505,000 this year, up about 50 percent from last year’s 341,000.
According to the Finance Ministry, the combined real estate tax for a 112 sq.m apartment in Eunma Apartment, in the affluent Gangnam area of Seoul will skyrocket to W3,044,000 from last year’s W384,000, nearly 700 percent. The same for a 181.5-sq.m flat in Mongryeon Shindonga Apartment in Pyeongchon, Gyeonggi Province worth W872 million will spiral to W1,752,000 from last year’s W266,000, or 560 percent.
But Finance Minister Kwon O-kyu said, “Because 63.5 percent of householders subject to combined real estate tax own two households or more and because the burden of ordinary citizens is not so big, we have no plan to modify or reduce combined real estate taxes.”
- 17 Percent Flat Tax for Foreign Nationals Residing in Korea: Korean Tax Amendments for 2013
- Personal Tax Rates in Korea to Rise in 2012: Individual Income Tax Rates in Korea
- Korean Tax Law Amendment Press Release by Korean Government
- Korean Real Estate Acquisition Taxes for Purchase of Real Estate in Korea
- Amendments to Corporate Tax Rates in Korea for 2012: Korea Corporate Tax Rates in Korea
- Tax Incentives May Decrease for Foreign Companies doing Business in Korea: Tax Law Updates