Real Estate `Tax Bomb` Really next year?… How much is the tax on tax and transfer?

This year, the real estate market has increased transaction volumes and prices skyrocketed due to abundant liquidity and inflow of funds due to low interest rates.

Accordingly, the government announced the ‘7·10 measures’ with the main focus of strengthening the capital gains tax (transfer tax) and comprehensive real estate tax (variety tax) to stabilize the market and suppress investment demand. Most of these measures will be implemented from the first day of next year.

At the time of the announcement of the ‘7·10 measure’, experts evaluated it as a high-intensity measure to cut off speculative demand by greatly raising taxes on multi-homed people. Although the increase in real estate-related taxes had been announced, the comprehensive real estate tax, capital gains tax, and acquisition tax were all raised at once, and it was said that the impact on the market would be significant.

First, from January 1 of next year, the tax base of taxation for owners of 2 houses or less is increased by 0.1 to 0.3% point for each section, and for those with 3 or more houses and in the area subject to adjustment, the tax base is increased by 0.6 to 2.8% points. For corporate-owned houses excluding dormitories, the highest personal tax rate is applied, and 3% for 2 houses or less and 6% for 3 houses or more are applied at a time.

For example, in the case of Mr. A, who owns two 84.5m2 units for’Mapo Raemian Prugio,’ and 84.4m2 for Eunma Apartment in Daechi-dong, Gangnam-gu, the ownership tax will increase by 38.44 million won from a total of 2967 million won this year to 68.11 million won next year. As all areas of Seoul are tied to a regulated area, the plan to increase the tax rate for second-home residents is also applied.

The published price of Raemian Prugio this year is 1,0177.6 million won, and the published price of Eunma apartment is 1.533 billion won. The sum of the two apartments is 2.55 billion won. It is assumed that the listed price will increase by 10% next year. Mr. A has to pay 18.57 million won in the final tax this year, 4.44 million won in property tax, 3.71 million won in rural specialty tax, and 890,000 won in local education tax. ) And local education tax (1.09 million won) are also rising.

Of the total population, the housing sector taxpayers were 511,000 last year, accounting for 1.0% of the population. The number of people subject to this increase in the heavy tax rate is 0.4%, which is less than this. In particular, the burden of ownership tax is expected to increase for corporations with three or more houses, which are subject to the maximum tax rate of 6.0%.

In addition, the ratio of the fair market value applied to the published housing price when determining the tax base is also raised from 90% this year to 95% next year. The upper limit on tax burden is raised to 300% (formerly 200%) for two houses in the area subject to adjustment, and the upper limit on tax burden for corporate-owned housing is abolished. For corporate-owned housing, the basic deduction of KRW 600 million is also abolished.

On the other hand, the tax deduction rate for senior citizens among real demand one homeowners will be raised by 10 percentage points. The limit of the combined deduction rate combined with the long-term holding deduction is also raised by 10 percentage points from 70% to 80%, reducing the burden of tax on the elderly.

In addition, couples who own one house under the common name can select the deduction method to be applied when calculating the comprehensive real estate tax. As of now, couples may receive a total of 1.2 billion won deductions, each of 600 million won. Like the first-generation one-household, you can choose a more advantageous method as you may receive a deduction of 900 million won and then deduction for the elderly and deduction for long-term retention.

◆ Transfer Tax Increased the highest rate in January next year

On the first day of the new year, the highest transfer tax rate will rise from 42% to 45%. Currently, the highest tax rate of 42% is applied when the tax base exceeds 500 million won, but the maximum tax rate is raised to 45% as a new section exceeding 1 billion won is established.

The method of calculating the period of holding a house for 2 years or more, which is a condition of exemption from the transfer tax of 1 household, 1 house, is also changed. In order for a household with two or more houses to sell all but one house to become one, and to be exempted from the one-household tax for that house, when calculating the retention period, it is not the date of acquisition of the relevant house, but the’one house after selling all other houses. It must be calculated from the day`. However, the exception of housing is temporary housing exemption for unavoidable reasons such as 2 housing.

From next year, the right to sell is also included in the number of houses.

Currently, when the transfer tax is imposed, the right to sell is not included in the number of houses, but when selling houses in an area subject to adjustment, the right to sell is also included in the number of houses and a transfer tax is imposed. However, this applies only to pre-sale rights acquired after January 1 of next year, and does not apply to pre-sale rights currently held.

The residence requirement for long-term holding special deductions will be added, and the additional tax rate for corporate-owned houses will increase significantly.

The current special deduction for long-term holding of one household for one household is 8% per year for each holding period for two or more years, and up to 80% for long-term holding is applied. However, from next year, the deduction rate of 8% per year will be divided into 4% per year for the retention period and 4% per year for the period of residence. In other words, a house that has been owned and lived for more than 10 years is eligible for a deduction of up to 80% of 40% each.

The additional tax rate (except for employee housing) when transferring houses owned by corporations is also increased. Currently, the basic corporate tax rate (10-25%) is taxed on gains from the transfer of housing, but the additional tax rate will increase to 20% from next year. Additional tax rates are applied to not only housing but also occupancy rights and sale rights.

The heavy transfer tax on multi-homed and short-term trading in the area subject to adjustment will take effect on June 1 of next year. Selling by the end of May next year will be subject to the current tax rate. It opened the so-called’exit’ to multi-homed people.

Currently, 40% of houses held for less than one year and the basic tax rate were applied for houses held for less than two years, but for transfers after June next year, the tax rate is increased by 30% to 70% for houses held for less than one year.

Homes held for less than two years are subject to a single rate of 60%. The capital gains tax rate for pre-sale rights is currently a 50% tax rate for pre-sale rights located in the area subject to adjustment, regardless of the holding period, but for pre-sale rights transferred after June next year, 70% if held for less than one year regardless of region, In this case, a 60% tax rate is applied.

In addition, in addition to the current basic tax rate, the heavy transfer tax rate applied by multi-homeowners when selling houses in areas subject to adjustment exceeds 10% for 2 homeowners and 20% for owners of 3 or more houses, but will increase to 20% and 30% respectively next year. .

Jeong In-taek, director of the JNK Development Institute, said, “If there is a signal that the tax burden becomes heavy and the housing price is going downward, there is a possibility that multi-homed people will offer their sale.” He suggested.

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