Nine One Hannam Worth Over 20 Billion Won Not Considered 'Luxury Housing'... "Revision of Standards Needed"

Area Criteria for Luxury Homes Missed by 1㎡
Hannam The Hill, PH129, Poseys Hangang Also Avoid Surcharge
Ambiguous Common Area Standards Lead to Conflicting Judgments
Luxury Home Price Criteria Fails to Reflect Reality
14% of Seoul Apartments Exceed Official Price of 900 Million KRW

Seoul City has pushed back after the Tax Tribunal ruled that the high-end residence ‘Nine One Hannam’ in Hannam-dong, Seoul?a symbol of luxury housing?is not a luxury home, thereby canceling the acquisition tax surcharge. The city pointed out that not only Nine One Hannam but also most luxury residences such as Poseys Hangang and The Penthouse Cheongdam are avoiding the acquisition tax surcharge, emphasizing the urgent need to revise the standards for luxury homes, which have become ineffective.

Yonhap News

Tax Tribunal: ‘Nine One Hannam Is Not a Luxury Home’

Seoul City recently disclosed on the 17th the major complexes that have avoided the acquisition tax surcharge following the Tax Tribunal’s decision to cancel the surcharge in the appeal filed by the developer, Daesin Property, against the city. According to the city, △Nine One Hannam single-floor units with exclusive area of 244.34㎡ and duplex units of 273.94㎡ △Hannam The Hill single-floor units of 244.75㎡ △The Penthouse Cheongdam (PH129) duplex units of 273.96㎡ △Seongdong-gu Acro Seoul Forest duplex units of 273.92㎡ △Gwangjin-gu Poseys Hangang single-floor units ranging from 244.77㎡ to 244.99㎡ have all escaped the surcharge, similar to Nine One Hannam.

Nine One Hannam is considered a representative luxury residence inhabited by famous celebrities and corporate chairpersons. It consists of 124 units with an exclusive area of 244㎡ and 43 duplex units of 273㎡. In July last year, a 273.41㎡ unit was sold for 22 billion KRW, and in June of the same year, a 273.94㎡ unit was traded for 20 billion KRW.

The Tax Tribunal ruled that Nine One Hannam did not meet the area criteria for luxury homes and thus was exempt from the acquisition tax surcharge. As a result, the city can no longer impose 80 billion KRW in taxes on Daesin Property. The city also refunded 120 billion KRW charged to buyers following the Local Tax Deliberation Committee’s review in April last year.

Ambiguous Common Area Criteria, Administrative Authorities Cannot Object

The decision that Nine One Hannam does not qualify as a luxury home stems from ambiguous criteria. For Nine One Hannam, the exclusive area of the penthouse units is 244㎡ and the duplex units 273㎡, each falling short by 1㎡ of the luxury home area standard. Current acquisition tax surcharge regulations define luxury homes as ‘residences with a total floor area excluding common areas of 245㎡ (274㎡ for duplexes) and a standard market price (or official price if available) exceeding 900 million KRW.’ If classified as luxury homes, an additional 8% acquisition tax rate (totaling 10.8?12%) is applied on top of the general rate.

However, the city argued that underground parking lots and storage rooms equipped with partition doors provided to individual households should be considered exclusive spaces, and including these spaces would make the properties subject to the acquisition tax surcharge. The Tax Tribunal, however, ruled that these spaces are common areas, thus Nine One Hannam is not a luxury home.

Shin Seon-jong, spokesperson for Seoul City, commented, "The Tax Tribunal made the cancellation decision solely on the grounds that parking lots and storage rooms are common areas according to property records (registers, building management ledgers, etc.), citing the lack of a separate definition of common areas in local tax laws and the application of housing-related laws. This is a very difficult-to-understand and unfair ruling."

The city pointed out that construction companies are exploiting the criteria to avoid acquisition tax surcharges. The Tax Tribunal’s decision cannot be contested by administrative agencies. Even if similar avoidance cases arise, taxation cannot be enforced as long as current regulations remain. A city official explained, "Even if we identify similar cases and impose taxes, the Tax Tribunal will likely accept the taxpayer’s appeal, so administrative authorities cannot take further action."

"Need to Improve Luxury Home Acquisition Tax Surcharge Standards Set 50 Years Ago"

Seoul City emphasized the need to revise the luxury home standards following the Tax Tribunal’s recent decision. It also pointed out that the luxury home price standard set at ‘900 million KRW’ is unrealistic. Approximately 396,000 households, or 14% of Seoul’s apartments, have official prices exceeding 900 million KRW. Among them, 144,074 apartments are priced between 900 million and 1.2 billion KRW, and 251,660 exceed 1.2 billion KRW.

In October last year, Representative Kim Seong-hoe of the Democratic Party and others proposed an amendment to the Local Tax Act to calculate luxury home standards solely based on ‘price criteria.’ Kim explained the reason for the proposal: "Even if a home’s transaction price is very high, if it falls short of either the area or price criteria, it can be excluded from the luxury home acquisition tax surcharge. This has led to cases where the acquisition tax rate for luxury homes is lower than that for low-priced homes, undermining the effectiveness of the surcharge system and tax equity."

The Ministry of the Interior and Safety is also conducting research to develop improvements to the local tax amendment and is working hard to come up with improvement measures in the first half of this year. A Seoul city official explained, "The current law applies both area and price criteria, and while there is a proposed amendment to remove the ‘area’ criterion, that alone is insufficient. Since the situations differ between the metropolitan area and other regions, it is necessary to review what level is appropriate." He added, "We should also consider separate taxation measures for luxury homes."

This content was produced with the assistance of AI translation services.