Comprehensive Real Estate Tax Expected to Shift to Value-Based amid Surging Housing Price Index, Impact on Multiple Homeowners
As the housing price prospect index hits a record 127, a plan to shift real estate taxes to a 'value-based' system is expected in early August.
Key Summary: With the housing price prospect index hitting a 4-year and 10-month high of 127, the government is highly likely to announce a tax reform in early August that shifts the Comprehensive Real Estate Holding Tax basis from the 'number of homes' to 'total combined value', raising expectations for reduced tax burdens on multiple-home owners.
Housing Price Index Surpasses 127, Eyes on Real Estate Tax Reform
As the housing price prospect index recently surpassed 127—marking the highest level in 4 years and 10 months—apartment prices in the broader capital area continue to rise, showing signs of overheating. Amid this trend, market attention is highly focused on the real estate tax reform plan set to be announced by the government and the ruling party in early August. The core of this reform is shifting the Comprehensive Real Estate Holding Tax standard from the 'number of homes' to the 'total combined value'.
Shift to Value-Based Taxation: Core Details and Market Impact
Currently, the Comprehensive Real Estate Holding Tax imposes heavy penalty rates on multiple-home owners based on the 'number' of properties rather than their total value. By changing this to a total value-based standard, the tax burden on those holding multiple low-cost homes will be significantly reduced.
- De facto Abolition of Heavy Taxation on Multiple Homes: Regardless of the number of homes, if the total property value is the same, the same tax rate as a single-home owner will be applied, potentially resolving the controversy over punitive taxation.
- Preventing Regional Decline and Boosting Transactions: Investment sentiment for low-cost regional homes, which have been neglected due to tax burdens, is expected to recover, positively impacting regional real estate markets.
Frequently Asked Questions (FAQ)
Q1. When will the value-based real estate tax reform take effect?
If the government's tax law revision bill is announced in early August and passes the regular National Assembly session in the second half of the year, it is highly likely to be applied starting from the 2027 tax assessment. The passage through the National Assembly remains the most critical variable.
Q2. Will the preference for a 'single high-value home' decrease?
If heavy tax rates for multiple-home owners are unified based on value, demand may shift from stubbornly holding a single expensive home in Seoul to diversifying investments across multiple homes in the metropolitan area and regions, which is widely expected to somewhat ease the extreme polarization.