The government is moving to increase the property tax burden on high-value single homes. Plans are being considered to shift the comprehensive real estate tax system from a focus on the number of homes to the value of the properties, with a tiered tax burden based on housing prices.
According to data from the National Tax Service on July 26, the total amount of tax deductions for individual comprehensive real estate taxes applied to homes valued over 2 billion won for the 2025 tax year increased by approximately 27.9 billion won (153.2%) from the previous year, reaching 46.1 billion won.
A property value of 2 billion won is estimated to correspond to an apartment market price of about 6.57 billion won. This means that the tax deductions for high-value home owners have more than doubled in just one year.
Those subject to the comprehensive real estate tax for properties valued over 2 billion won include 8,399 individuals and corporations, accounting for only 1.6% of the total 538,439 taxpayers. However, the deductions received by this group represent 22.2% of the total tax deductions of 207.1 billion won.
There is a notable concentration of tax deductions by region, with 87.9% of the total deductions concentrated in homes located in Seoul. This has raised concerns that tax benefits are disproportionately favoring high-value single home owners, particularly through long-term and senior citizen deductions.
As the amount of deductions has increased, the actual tax burden on high-value home owners has decreased. The average comprehensive real estate tax for individuals owning homes valued over 2 billion won was 55.7 million won last year, a decrease of 23.2% from the previous year. In contrast, the average tax for those owning homes valued under 2 billion won remained stable at 1.59 million won.
To address these issues, the government is considering restructuring the comprehensive real estate tax into three tiers: basic deductions, moderate burdens, and high-value properties. Basic deductions would exempt certain properties from taxation, while homes in the mid-price range would maintain or gradually adjust their current tax burdens.
For high-value homes, options being discussed include further subdividing the value brackets or increasing tax rates. The threshold for defining high-value homes is reportedly being considered at a market price range of 3 billion to 5 billion won.
The current comprehensive real estate tax system aggregates the publicly assessed prices of homes owned by individuals, allowing a deduction of 120 million won for single-home owners and 90 million won for multiple-home owners. The taxable amount is calculated by multiplying the remaining amount by a fair market value ratio of 60%, with higher tax rates applied to those owning three or more homes.
This has led to criticism that tax burdens can vary significantly based on the number of homes owned, even if the total value of the properties is the same. Last year, individuals owning properties valued between 3 billion and 5 billion won paid an average of 41.94 million won more in comprehensive real estate tax than single-home owners. The differences were 21.2 million won for properties valued between 2 billion and 3 billion won, and 10.64 million won for those valued between 1.4 billion and 2 billion won.
The government is examining a tax rate structure that focuses on the total value of properties and the ability to pay, rather than the number of homes owned. This aims to address the current situation where an individual owning one home valued at 3 billion won pays a lower tax rate than someone owning three homes valued at 1 billion won each.
Additionally, the government is considering adding or strengthening residency requirements for long-term and senior citizen tax deductions. Currently, single-home owners can receive deductions of 20-50% based on the length of ownership and 20-40% based on age, allowing for a maximum tax reduction of 80%, without verifying actual residency.
The government plans to protect actual residents who own one home while considering reducing tax benefits for those who hold high-value homes for investment purposes over the long term. Specific details regarding adjustments to basic deductions, high-value thresholds, and tax rate structures are expected to be included in a tax reform proposal to be announced in early August.
* This article has been translated by AI.
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