South Korea considers differentiated property tax for ultra-high-value homes

South Korea is signaling a potential shift in its property tax policy, with officials suggesting differentiated taxation for single-home owners whose properties fall into the 'ultra-high-value' category. Kim Yong-beom, Chief Policy Secretary to the President, indicated on July 19th that there is a consensus on treating these high-end homes differently from standard residences.

"Even for a single home for actual residence, ultra-high-value real estate should be viewed differently from general housing," Kim stated during an appearance on KBS's 'Sunday Diagnosis.' He noted that while presidential discussions mentioned 3 billion and 5 billion won as potential benchmarks, the official tax criteria, based on assessed prices, might differ from public perception.

The government plans to finalize the specifics, including the precise value thresholds and tax burdens, through simulations and public consultation. A real estate forum attended by President Lee Jae-myung is scheduled for July 23rd, with the final tax law revisions expected by the end of the month.

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Even for a single home for actual residence, ultra-high-value real estate should be viewed differently from general housing.

Kim outlined the principles for the tax reform: distinguishing between multiple and single homeowners, separating owner-occupied versus non-owner-occupied properties, and applying differentiated taxes to ultra-high-value homes. He emphasized that the ability to pay and the impact on the housing market are key considerations for these high-value properties.

While acknowledging calls to lower capital gains taxes alongside potential increases in holding taxes, Kim suggested that a uniform reduction in capital gains tax is unlikely. Instead, the overall capital gains tax system, including long-term holding special deductions, will be comprehensively reviewed for fairness. Simultaneously, the government is prioritizing increasing housing supply through measures like accelerating new city construction and activating the purchase-and-lease program for privately built homes. Other options include converting commercial buildings in urban centers for residential use and rezoning commercial land in new towns for housing.

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We will mobilize various methods for supply with a desperate mindset to solve the problem.