S. Korea's property tax reform may shift benefits from joint to sole ownership

South Korea's upcoming tax reform for 2026 is set to revise the long-standing practice of joint spousal ownership for tax benefits, particularly concerning the comprehensive real estate tax (종부세). The new regulations, effective from 2028, introduce nuances that could make sole ownership more advantageous for some homeowners, especially those with higher-value properties.

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For single-homeowner couples with properties valued up to 1.8 billion won (official price), joint ownership is advantageous... For high-priced homes, sole ownership may be more beneficial for long-term residents.

Under the proposed changes, joint ownership for a single-homeowner couple might become less favorable for properties exceeding a certain threshold. While joint ownership currently offers a higher combined basic deduction (1.8 billion won) compared to the single-homeowner special deduction (1.4 billion won), the new rules adjust the fair market value ratio (공정시장가액비율). Joint owners will face an 80% ratio, similar to multi-homeowners, while sole owners will benefit from a 70% ratio, down from the current 60% for all single-homeowners. This shift could penalize joint ownership arrangements.

However, the advantage hinges on the property's official price, with a key dividing line at 1.8 billion won (approximately 2.6 billion won in market value). Below this price point, joint ownership may still be beneficial due to the higher deduction. The situation changes for more expensive homes. If a sole owner benefits from maximum age and residency-based tax credits (up to 80%), they could end up paying less property tax than a jointly owned couple, even on homes valued between 2.8 and 4.6 billion won.

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The change makes joint ownership for a single home appear like a 'penalty' compared to sole ownership.

For instance, on a 3.5 billion won property, a sole owner receiving maximum tax credits would pay 670,000 won in property tax, compared to 980,000 won for a jointly owned couple without such credits. This calculation underscores the complexity introduced by the reform, requiring homeowners to weigh the property's value, their residency duration, and potential tax credits when deciding between joint or sole ownership.

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Joint owners can choose between the joint ownership method and the single-homeowner special deduction, whichever is more advantageous.