The Tax Standard Value will Rise by 23.3 Percent on Average

The taxable property value of condominiums in the metropolitan areas around Seoul and other cities will increase by an average of 23.3 percent beginning next month.

In the Gangnam area, where real estate prices have jumped sharply this year, the taxable property value will increase by an average of 66.06 million won (18.4 percent) per household for 304,999 households, and in Gangbuk area the value will increase by 38.89 million won (21.3 percent), increasing the tax burden significantly.

For example, if a person gives his son an 81-pyong apartment valued at 1.665 billion won in Gangnam-gu, he must pay 494 million won in taxes, an increase of 90 percent from the former figure of 260 million won.

The National Tax Service (NTS) published its appraised property values for 929,595 (1,536 developments) condominiums on November 27. The new appraisals will apply to properties sold after December 1, including those sold by transfer of remaining mortgage payments.

Because the increases are focused in areas in which real estate prices have jumped sharply rather than the entire nation, a simple comparison is not available, still the rise is the highest level for 13 years since 1990 (46.5 percent).

The announcement targets metropolitan areas around Seoul including Gyeonggi and Incheon. Other metropolitan cities affected include Busan, Daejeon, Daegu and Ulsan, but Gwangju was excluded from the list. The popular real estate speculation regions of Chungnam Chonan Gongju and Gyengnam Changwon were included.

NTS adjusted one more time the standard value of those apartmentsof which the price rise on average was more than 50 million won of which the rise was less than 50 million but by more than 20 percent, which is two times of the average price rise around the country (11.2 percent rise from late April)

Seoul was the highest in the average value rise with 61.52 million won per one house. The second place was Gyeonggi area with 37.07 million and the third was Daejeon, which is the likely candidate of the administrative capital city, with 36.47 million.

The apartment house of which the standard value was the highest was ‘Cheongdam Royal County’ of 116 pyong in Cheongdam-dong, Gangnam-gu in Seoul with the value of 2.334 billion won.

‘Tower Palace II’ of 81 pyong in Dogok-dong, Gangnam-gu won the first place in the rise of standard value with the value increasing by 585 million won to 1.665 billion from 1.8 billion.

The standard value on which the taxes including the realty-transfer tax, inheritance tax and donation tax, which are imposed on the sale, inheritance and donation of the union houses including the apartment house and tenement house, base the amount. It is publicized as a little bit lower than the real price in the market. Because it is hard for the NTS to research all the market prices in every trading, the Commissioner of NTS makes the standard value public more than once a year after estimating the prices of lands and buildings collectively. Since the first announcement was made in February 18, 1983, total 33 announcements have been made including this time.