In a situation where the government is concerned about a ‘historical’ tax revenue deficit, it is tinkering with the card of raising the fair market value ratio (fair value ratio), which is the tax standard for comprehensive real estate tax (comprehensive real estate tax). However, in the case of multi-homed people or owners of high-priced homes, the tax burden is inevitable and voices of opposition are emerging. There are also concerns that it could pour cold water on the real estate market, which is slowly recovering.
According to the Ministry of Strategy and Finance on the 19th, the government is considering a plan to increase the fair value ratio of comprehensive real estate tax from the current 60% to 80%. The fair value ratio is used when setting the tax base for determining final real estate tax and property tax. The tax base is obtained by subtracting the deduction amount from the sum of the publicly announced prices of the houses owned and then multiplying by the fair market value ratio. If there is no change in the official housing price, the higher the fair value ratio, the higher the tax.
Last year, the Yoon Seok-yeol government lowered the fair value ratio from 95% in 2021 to the legal minimum of 60% to revitalize the real estate market. The purpose is to reduce the tax burden by lowering the fair value ratio. In addition, the burden of landlords’ comprehensive real estate tax has actually decreased by implementing policies such as lowering the market price reflection rate of the official price, easing the heavy duty tax, and easing the basic tax rate.
However, as the official price fell significantly this year, it became difficult to maintain the lower official price rate. This year, the publicly announced price of apartment houses fell 18.6% compared to last year, the largest drop since related statistics were compiled in 2005. In addition, as the basic deduction standard for comprehensive real estate tax for one homeowner was raised from 1.1 billion won to 1.2 billion won, a number of apartments were메이저놀이터 excluded from comprehensive real estate tax.
This is the reason why the government is considering taking out a card to raise the fair value ratio. The intention is to raise the fair value ratio to meet the sharp drop in tax revenue. The tax revenue from comprehensive real estate tax this year calculated by the government is expected to decrease by more than 30% from the previous year to 5.7 trillion won. Even this figure assumes that the fair value ratio is raised to 80%.
In the industry, there are voices that the government will inevitably raise the fair value ratio to fill the empty ‘country barn’. According to the Ministry of Strategy and Finance’s monthly fiscal trends, national tax revenue from January to April of this year was 134 trillion won, down by 34 trillion won from last year. Total imports also decreased by 34.1 trillion won from the previous year to 211.8 trillion won.
Landlords are dissatisfied with the inevitable tax burden. Mr. A, in his 40s, a multi-homed owner who owns apartments in Nowon-gu, Seoul and the metropolitan area, said, “The comprehensive real estate tax for the past two years has been abnormally excessive, and I think it is at a normal level now. I am already impatient to raise the final real estate tax again,” he said.
Song Seung-hyeon, CEO of City and Economy, said, “Since the market situation was worse than the level expected by the government last year, there is an evaluation that the level of fair market value reduction was excessive.” Because of the blow, there will be more cases of thinking about gifting as part of tax response.”
There is also an analysis that an increase in the fair value ratio will pour cold water on the real estate market, which is active. Go Joon-seok, CEO of JEdu Investment Advisory, said, “If the fair value ratio is raised, investors who are moving again will have deeper concerns.” It seems necessary to devise long-term measures to revitalize the market rather than short-term measures.”