Value context and insight. lkm@koreatimes.co.kr
Homeowners furious over tax spike
An apartment complex in Seoul. Korea Times file
By Lee Kyung-min
By Lee Kyung-min
A large number of home owners are expressing frustration over the recent spike in taxes, imposed on housing with officially appraised values over 900 million won ($814,000), Sunday.
Many of them including retirees and soon-to-be retirees say their income cannot cover the steep rise in central government-collected tax, which they say is an undue burden resulting from the government's dozens of botched real estate policies, defined by a nearly 60 percent jump in apartment prices in Seoul over the past three years.
They dismissed calls that a rise in tax corresponding to a spike in housing prices is inevitable, saying being forced to leave a place where they have lived for decades just to not be subjected to tax is not only a kind of punishment but an infringement on individual rights.
Some owners argue the tax is no less than a fine issued in the absence of any offence and are questioning the legitimacy of the measure by asking whether the government would reimburse the paid amount if the prices fall in the coming years.
“Will the government pay the difference when the housing price falls below the price I paid a few years ago? Raising the tax means people must work until they die just to pay taxes,” one petitioner wrote on the Cheong Wa Dae website.
Opinions similar to this have garnered over 5,000 signatures online, and the number continues to rise.
The collective sentiment was fueled after the National Tax Service said Nov. 25 that over 1.8 trillion won in related taxes were imposed on 667,000 individuals and corporate entities in 2020, up 545 billion won, or 42.9 percent from the year before.
Also growing is criticism from couples that jointly own a home, a group of people not eligible to seek up to 70 percent in deductions granted based on the years owned and/or age of the owners.
For example, an owner of a home worth 2.5 billion won will have to pay 8 million won in tax, but the amount payable is reduced to 2.4 million with the deduction applied.
The varied complaints mostly from owners of single homes have promoted a minor opposition party lawmaker to propose a bill seeking to delay the payment of the tax until after an individual has either realized capital gains or changed the ownership of their home.
The bill pending at the National Assembly since July seeks to delay the tax payment by owners of a single home who are aged over 65 until after they have sold or bequeathed the property to their children or someone else of their choosing.
The tax will climb in the years to come since the government plans to increase the rate by a range of between 0.1 percent and 0.3 percent in 2021.
Owners of a home where the calculated minimum amount taxable ranges between 300 million won and 600 million won will be subject to a rate of 0.8 percent, up from 0.7 percent.
If the amount ranges between 600 million won and 1.2 billion won, the rate will be increased to 1.2 percent, up from 1.0 percent.
The amount is set by the officially appraised housing value minus 900 million won ― the maximum amount deductible ― multiplied by what the government calls “fair market rate,” set to be raised to 95 percent in 2021, up from 90 percent this year.