Super-luxury homes definition? Government says '3-5 billion won' opinions emerged

South Korea's government is exploring the creation of a new tax bracket for "super-luxury homes" as part of its ongoing real estate policy reforms. During a national forum on real estate policy, officials revealed that public consultations have suggested defining these high-value properties as those priced between 3 billion and 5 billion won (approximately $2.1 million to $3.5 million).

Lee Hyung-il, the First Vice Minister of Economy and Finance, presented the findings from preliminary consultations, which also addressed broader issues like housing supply, loan regulations, and taxation. A prevailing opinion among experts and the public is that owners of single, super-luxury homes should bear a greater social burden through differentiated property taxes. However, opinions are divided on the exact price threshold, with some advocating for stricter measures to curb the preference for owning a single, high-value property, while others urge caution due to concerns about taxing unrealized gains and the potential for increased costs to be passed on to tenants.

Discussions also focused on the comprehensive real estate tax (종부세), with a general consensus leaning towards shifting from a per-house count to a total asset value basis for taxation. For homeowners residing in a single property, opinions were split between strengthening residency requirements and increasing tax burdens, versus considering the difficulties in distinguishing genuine residents from investors and acknowledging unavoidable non-residency cases.

Regarding the relationship between property ownership taxes and transaction taxes, there was a debate between focusing on ownership taxes and reducing capital gains taxes, versus taxing capital gains in consideration of fairness with earned income. Online discussions often centered on the demand for lower transaction taxes if ownership taxes were to increase. The reform of long-term holding special deductions also saw proposals to reduce benefits for non-residents and set deduction limits, though online forums expressed concerns about reduced property listings due to inflation adjustments.