Seoul sees 30,000 new joint property owners as tax burden grows

The number of individuals co-owning properties in Seoul has surged by over 30,000 this year, a trend accelerating compared to the previous year. This rise is largely attributed to property owners seeking to leverage joint ownership as a tax-saving strategy amidst increasing property ownership tax burdens.

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As the burden of ownership tax increases, the cases of choosing joint ownership are likely to increase. A similar trend could emerge as seen when donations increased ahead of the tightening of capital gains tax.

Under current regulations, a married couple co-owning a single home can each receive a basic deduction of 900 million won, totaling up to 1.8 billion won. This is significantly higher than the 1.4 billion won basic deduction available to a single owner. As the government plans to increase property ownership taxes, particularly by raising the fair market value ratio and adjusting tax rates, co-ownership is becoming a more attractive option for tax mitigation.

For instance, the estimated annual ownership tax for a single owner of a 84㎡ apartment in Banpo-dong, Seocho-gu, is projected to increase from 18.09 million won this year to 27.63 million won next year, a jump of 9.54 million won. Co-ownership offers a way to lessen this impact.

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As the tax burden increases, demand for joint ownership will also increase. Given the experience of tax policies changing with each administration, demand to wait for policy changes through joint ownership may also appear.

Experts note that homeowners may opt for co-ownership not only to reduce immediate tax liabilities but also to observe potential shifts in real estate tax policies, which have historically varied with changes in government. This approach allows them to "wait and see" rather than immediately selling their properties. However, co-ownership may not be advantageous in all situations, especially for non-resident properties where basic deductions can be significantly reduced, necessitating careful consideration of tax implications before changing ownership structures.

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For non-resident properties, the deduction amount is significantly reduced, so you need to thoroughly consider the pros and cons before deciding on joint ownership.