July Major Real Estate Tax Reform Preview: Property Tax Hike and Strategies for Multiple Homeowners
The government's preview of the July real estate tax reform signals a property tax hike for multiple homeowners. We analyze the factors increasing the tax burden, including higher fair market value ratios, and its market impact.
With the government scheduled to announce a comprehensive real estate tax reform this coming July, a significant property tax (comprehensive real estate tax and property tax) hike targeting multiple homeowners has emerged as a focal point. Following a 15% surge in Seoul apartment prices since the launch of the Lee Jae-myung administration, this move is interpreted as a strong measure to curb speculative demand and induce the release of housing inventory.
Focus on 'Residence-based Taxation' and Higher Fair Market Value Ratio
The core of this tax reform goes beyond simple rate adjustments, aiming for a complete transition to a 'residence-based taxation system'. Notably, increasing the comprehensive real estate tax fair market value ratio—currently lowered to 60%—back to the 80-90% range is being heavily considered. This is seen as the most practical means of tax increase as it can be implemented immediately through the revision of enforcement decrees without needing National Assembly approval.
Expected key reform items include:
- Stricter taxes for high-priced and multiple homes: Discussions on punitive taxation for owners of homes with an assessed value exceeding 3 billion won.
- Special deduction for long-term holding overhaul: Redesigning tax credits to be proportional to the 'actual residence period' rather than the simple holding period.
Market Reaction and Future Housing Price Outlook
Market experts analyze that the preview of the property tax hike could induce multiple homeowners to release 'tax-saving urgent sales' in the short term. However, there are lingering concerns that this will further intensify the preference for a single 'blue-chip' property in core areas like Gangnam, accelerating the polarization of housing. Coupled with the recent drive for massive housing supply through the Rapid Integration Planning, market volatility is expected to peak in the second half of the year following the July policy announcement.
Frequently Asked Questions (FAQ)
Q. Are single-home owners for actual residence also subject to this property tax increase?
The government maintains a stance of protecting single-home owners holding properties for actual residence. However, for ultra-high-priced homes with an assessed value over 3 billion won, there is a possibility of an increased tax burden even for single-home owners.
Q. How much will taxes increase if the fair market value ratio goes up?
If the ratio is raised from 60% to 80%, combined with the realization rate of assessed values, the perceived comprehensive real estate tax for multiple homeowners could jump by at least 20% to over 40%. This is because it directly pushes up the tax base bracket.