The First Comprehensive Real Estate Tax Threshold: Current Market Value of 'Top 0.27%' Hits 3.7 Billion Won... Debate Over Ultra-High-Priced Homes [Real Estate A to Z]

9 Billion Won in 2005: The First Threshold for High-Priced Homes
Grand Debate on the 23rd to Cover Price Criteria and Taxation Methods
Reducing Long-Term Ownership Deductions and Lowering Transaction Taxes Also Key Issues

As the government moves towards increasing the tax burden on ultra-high-priced homes, there is growing attention on how specifically the price threshold will be set. On July 14, President Lee Jae-myung commented during a Cabinet meeting that online opinions were converging around a market value of 3 billion won, and he assessed this as possibly too harsh. The upcoming real estate grand debate, which will be presided over by President Lee on July 23, is also expected to feature discussions on the criteria for classifying ultra-high-priced homes.

President Lee Jae-myung is speaking at the Cabinet meeting held at the Blue House on the 14th. At the meeting, President Lee asked for opinions on strengthening the tax burden on ultra-high-priced single homeowners through real-time YouTube comments, and then said, "It seems that most agree." Photo by Cheongwadae Press Photographers Group

The most convincing indicator for defining ultra-high-priced homes is the Comprehensive Real Estate Tax, which was introduced in 2005 to target high-value properties. According to analysis by The Asia Business Daily on July 22, if the 900 million won threshold (0.27%)—which marked the start of the tax—is used as the benchmark for high-priced homes, and this is simply applied to the latest nationwide announced prices of apartment, townhouse, and multi-family dwellings as of January 1, 2025, then out of the 15,580,435 units subject to public notice, 0.27% corresponds to 42,068 homes.

Back then, 900 million won served as the first legal threshold for levying additional holding tax by distinguishing general from high-priced homes. If one were to locate the 42,068th home in descending price order, the public notice price would be calculated at 2,542,000,000 won. By simply adjusting for the government-assessed price realization rate of 69%, this translates into an actual market value of approximately 3,680,000,000 won. This is similar to the 3 billion won figure that emerged from online public opinion during the previous Cabinet meeting.

The Comprehensive Real Estate Tax is based on the total property value owned by an individual, not the price of each home. Thus, it applies not to "owners of homes priced over 900 million won," but to those whose combined appraisal or publicly announced prices of owned homes exceed 900 million won.

Currently, the basic deduction is set at 1.2 billion won for single-home households and 900 million won for multiple-home owners. The 900 million won threshold is also one of the criteria for high-end housing subject to higher acquisition taxes.

The government has not yet specified what proportion of homeowners will see a significant increase in holding tax burdens. It also remains undetermined whether a new threshold for ultra-high-priced homes will be set with higher tax rates, or if existing deductions will be reduced, as well as what the specific taxation method will be.

Beyond ultra-high-priced homes, the grand debate is expected to see heated discussion over the criteria for the long-term ownership special deduction for capital gains tax on real estate. Presently, owners can receive a deduction of up to 40% each for period of ownership and residence, for a total of up to 80%.

Reducing or eliminating the deduction for the ownership period is considered the most likely reform. President Lee has continuously indicated the possibility of restructuring this system, arguing that it is wrong to reduce taxes simply because someone has owned a property for a long time. However, since the need for a supplementary measure has been raised for single primary residences, a compromise such as raising the deduction rate for the residence period is also possible.

Lee Joongkyo, professor at Yonsei University Law School, argued at a National Assembly forum held the previous day: "The long-term ownership deduction has excessively benefited owners, becoming the core mechanism enabling so-called 'the one smart home.' Therefore, the deduction rate needs to come down overall. Moreover, considering that no country imposes a surcharge based on the number of properties owned, the entire system should be simplified by focusing on price rather than the number of homes and by easing excessive punitive tax rates."

In addition to increasing the burden of holding taxes, there have been consistent calls for reducing transaction taxes (acquisition tax). Lowering the tax burden is cited as a way to facilitate the buying and selling of homes for both sellers and buyers.

Other key issues include the standards for taxation such as publicly announced prices, the fair market value ratio, and upper limits for tax burdens. Although the government sets public notice prices each year, there are constant criticisms about the discrepancy with actual transaction prices or market values.

Public notice prices are used not only as the basis for taxation, but also in various welfare programs, including basic pensions and health insurance premiums. The fair market value ratio currently stands at 60% for the residential segment of the Comprehensive Real Estate Tax. The cap on holding tax increases ensures that the annual payment cannot exceed 150% of the previous year. However, because this is subject to administrative discretion, there are concerns it could be applied inconsistently, thereby undermining predictability.

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