House price rises by 1 billion, but tax is 1.6 billion…

Two houses with small size Jamsil L’s, who lives in Raemian Firstage in Banpo-dong, Seocho-gu, Seoul, and lives in Jamsil-dong, Jamsil-dong, Songpa-gu, Seoul. The comprehensive real estate tax (deposit tax) is expected to double from 49 million won last year to 125 million won this year. In 2017, when the current government was established, the final tax was only 7 million won. It has increased 16 times in 4 years. During the same period, house prices rose 80%. It deserves to be called a’bomb’.

The tax bomb doesn’t end there. This year begins. Tax accountants agree, “The taxation tax coming from this year is different from the previous one.” As such, it is expected that the taxation tax will rise as a’typhoon’ in the housing market where the rising pressure is still strong. It is noteworthy whether it will induce the sale of multi-homeowners to relieve the anxiety about house prices.

The five-stage variables that determine tax this year will be adjusted upwards at once, causing amplification of each other, leading to a sharp rise in the taxation tax. The market price, which is the standard of the published price, which is the amount used to calculate the tax, has increased a lot. According to Kookmin Bank, the rate of increase in apartment prices in Seoul last year was 13.1%. This is the second time since 2006 (24.1%), when house prices rose more than 10% per year, after 2018 (13.6%).

The quoted price rises more than the market price increase. According to the government’s roadmap for realization of published prices announced in November of last year, the rate of reflecting the market price (realization rate) of the listed prices of high-priced houses increases by 2-3 percentage points every year from this year to 2025. The ratio of the fair market value that is reflected in the tax calculation among the published prices will also increase by 5 percentage points this year.

Then, the tax rate applied to the tax base obtained by multiplying the official price by the fair market value ratio will double this year, completing the tax bomb.

The increase in the taxation tax varies depending on the region and the number of houses held, and the two houses in the area subject to adjustment are most affected. This is because the upper limit on tax burden, which is the limit for tax increase compared to the previous year, will be lifted from 200% to 300%. Less than 2 houses and more than 3 houses are 150% and 300%, respectively.

In the area subject to adjustment 2, the surge in the tax for housing owners does not apply only to Seoul. Last year, a large number of small and medium-sized cities were designated as target areas for adjustment, reaching the entire country. In recent years, when house prices have risen, there has been a lot of’expedition investment’ from Seoul to local and local to Seoul.

Tax Accountant Park Jeong-hyun explained, “When the two housing locations are all areas subject to adjustment, the tax rate rises significantly from the general tax rate to the middle tax rate, and the upper limit on the tax burden rises, and the tax increases the most.”

The tax for the two houses in Seoul and Busan, which was 17 million won last year, will nearly triple to 62 million won as Busan is included in the adjustment target area this year.

As of 2019, two-homed households nationwide accounted for 2.3 million households, accounting for most of the total multi-household households (3,17 million).

With this year’s tax increase, it is expected that the tax will be higher than the rising house price. It’s the plate where you have to pay taxes in debt.

In the case of the top two Gangnam houses, assuming that the house price increases by 10% every year, the total tax for five years until 2025 is 980 million won. In the same period, the transfer tax of non-residential houses, which increased by 1 billion won, exceeds 600 million won. While non-resident homes rise by 1 billion won, the tax payable is 1.6 billion won. Tax Accountant Kim Jong-pil said, “Even if the house price rises a lot in the future, we can vomit it all with taxes.”

As the ruling party currently occupies the majority of the seats in the National Assembly, it is difficult to expect tax relief unless the house price is lowered enough to revitalize the housing economy. If the number of houses is reduced to one house, the tax rate is lowered, and taxes are drastically reduced by receiving tax deductions for senior citizens and long-term holdings that are not found in multi-homed people. If the two houses in Gangnam are reduced to one, the tax for the end of this year will fall from 125 million won to 14 million won (60 years old, 5 years old). It is only 5 million won if it falls under the 80% limit of the tax credit for senior citizens and long-term holdings.

The government expects multi-homed people to dispose of them to reduce their tax burden. Since the transfer tax will be strengthened from June this year, if you sell, it is better to sell before June. It must be sold before June to avoid paying the final tax this year. The base date of the taxation tax is whether it is owned as of June 1.

It is true that multi-homers are more likely to choose to sell to reduce the number of houses. Previously, the government turned to gift instead of selling, but the government raised the gift-acquisition tax rate from 4% to 12% last year to block the retreat. It was the largest since 2006, when the number of gifted gifts began to be counted last year because of the rush of gifts before the increase in the gift acquisition tax rate. This is enough to give a gift to the multi-homed person. There is a way to reduce the number of houses through trust, but again, it became difficult because the government strengthened the related tax system last year.

However, it is unclear whether the rise in house prices will slow even if the number of multi-homed units increases. Waiting demand buys the property right away, and if there is more demand than the property, the house price will continue to rise.

If the consumer believes in the government’s measures to expand supply and waits for the second and fourth supply expansion measures, the buying tax may decrease and the sale may accumulate. Park Won-gap, a senior real estate expert at Kookmin Bank, predicted that “unless the expectations of rising house prices and anxiety about the shortage of housing supply are overcome, the house price will remain strong even if the number of multi-household sales increases.”

Multi-homed people will have to bounce tax abacus with their hands, watch the market trends with their eyes, and spend the spring while worrying.

Jangwon Ahn, Senior Real Estate Reporter