■ 2021 real estate tax changes
Multi-homed person/corporate tax charges increase rapidly
‘Fair market price’ application ratio increased
From 90% last year to 95% this year
Sales rights are also included in the number of houses
Transfer tax is imposed in the adjusted area
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In order to meet speculative demand in the real estate market, the government will simultaneously increase the comprehensive real estate tax and capital gains tax rate for multi-homeowners from 2021. Owners of three or more houses or corporations that own a house are required to pay an additional tax rate of up to 6%, and multi-homeowners in’adjusted areas’ pay an additional tax rate of up to 10-20% when paying the transfer tax. The highest rate of transfer tax will also change from 42% to 45%. Tax experts advise that in 2021, when holding, acquiring and transferring real estate, taxes should be carefully checked.
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◇ How does the ending tax change? = The ending tax will change significantly in 2021. In detail, multi-households with three or more houses or two or more households in an area subject to adjustment are subject to a final tax rate of at least 1.2% to a maximum of 6% for each tax base section. In the case of corporations, the highest individual tax rate of 6% is applied as a single tax rate. The burden of ownership tax for corporations and multi-homed people is increasing.
In addition, the ratio of applying the’fair market price’ applied to the published housing price when determining the tax base will also increase from 90% in 2020 to 95% in 2021. The upper limit of tax burden is raised to 300% (formerly 200%) for two houses in the area subject to adjustment, and houses owned by corporations are abolished. The basic deduction of KRW 600 million for corporate-owned houses will also be abolished.
On the other hand, in order to reduce the tax burden of real-demand one-households, the tax deduction rate for elderly one-households in one household is raised by 10% points for each section. Those aged 60 to 65 go up to 20%, those aged 65 to 70 go up to 30%, and those over 70 go up to 40%. The combined deduction limit is also raised to 80%. In addition, couples who own one house under the common name can select the deduction method to be applied when calculating the tax. As of now, couples may receive a deduction of KRW 600 million each, with a total of KRW 1.2 billion, or may receive a deduction of KRW 900 million, like a first-generation, single-family dweller, and receive deductions for the elderly and deductions for long-term possession.
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◇Including the number of houses when calculating the sale right and the transfer tax = Not only the tax inclusive, but also the transfer tax.
First of all, the highest tax rate rises from 42% to 45%. If the tax base exceeds 500 million won, the highest tax rate of 42% is applied, but starting in 2021, the maximum tax rate will be raised to 45% with the establishment of a new section exceeding 1 billion won. The method of calculating the period of holding a house for more than two years, which is subject to the exemption from the transfer tax for one household, is also changed.
For example, if a household with two or more houses sells all but one house and becomes one house, and is exempt from the one household one house tax, when calculating the retention period, it is not the date of acquisition of the relevant house, but’after selling all other houses 1 It must be calculated from the date of becoming a homeowner. However, an exception is made to housing that is subject to tax exemption from one housing due to unavoidable reasons such as temporary two houses.
Sales rights are also included in the number of houses. 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. This applies only to pre-sale rights acquired after January 1, 2021. This does not apply to pre-sale rights currently held.
In addition, the period of residence was added to the requirement to apply a special long-term deduction for one-family house with an actual transaction exceeding 900 million won. The deduction rate is adjusted from 8% per year during the holding period to ‘4% retention period + 4% residence period’ for houses transferred from January 1st. In addition, from June 1, 2021, 70% of members less than one year and 60% of less than two years, including the right to move in and sale for members, are taxed. Even if the right to pre-sale is held for more than two years, a heavy tax rate of 60% is applied.
/ Reporter Jiyoon Yang [email protected]
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