Comprehensive Real Estate Holding Tax Overhaul Based on Value: How Much Will Taxes Decrease for Single-Home Owners?

The government's Comprehensive Real Estate Holding Tax reform is leaning towards shifting the taxation framework from a 'number of properties' basis to an 'aggregate value' basis. In particular, it is highly likely that the basic deduction for owner-occupied single homes will be raised from the current 1.2 billion won to the 1.3-1.4 billion won range, significantly easing the tax burden on the middle class.

Abolition of Punitive Taxes for Multiple Homeowners and Shift to Value-Based Taxation

The core of this tax reform is to abolish punitive taxation based on the 'number of properties owned' and secure tax equity proportional to asset value. Previously, there was constant controversy over reverse discrimination where multiple low-value homeowners paid more taxes than high-value single homeowners. The government plans to reorganize taxpayers into three groups based on value: basic deduction, medium burden, and ultra-high value, applying targeted taxation.

Specifically, owners of ultra-high-priced homes over 3-5 billion won in prime locations like Gangnam are expected to face a heavier tax burden through higher tax rates and an increased fair market value ratio (up to 80%). On the other hand, multiple homeowners with relatively low aggregate property values will likely find some breathing room.

Market Impact and Future Outlook

The shift to value-based taxation is analyzed to bring two major changes to the market. First, the phenomenon of funds rushing towards a 'valuable single property' to avoid tax bombs will be somewhat mitigated, potentially revitalizing transactions in the low-value multiple-home market. Second, if the basic deduction for single-home owners expands to around 1.4 billion won, the dissatisfaction of those who unfairly paid the tax due to rising assessed values will be resolved. The final tax reform plan is expected to be announced as early as early August, drawing massive attention from real estate communities.

Key FAQ on Real Estate Tax Reform

• Q. Will taxes for multiple homeowners definitely decrease if the criteria shifts to value?
  A. It depends on the aggregate value. General multiple homeowners whose combined property value does not exceed the ultra-high criteria (e.g., 3 billion won) will see a significant reduction in tax burden, but ultra-high-value multiple homeowners may face even greater burdens.
• Q. When will the higher basic deduction for single-home owners be applied?
  A. If the final tax reform plan is confirmed in August and passes the regular National Assembly session, it is highly likely to be applied starting from next year's tax assessment.
• Q. What benefits will co-owning single-home couples receive?
  A. Depending on discussions to raise the per-person basic deduction (currently 900 million won), the joint deduction for couples could potentially increase beyond the current 1.8 billion won, further amplifying the tax-saving effect.