Consistency of real estate policy urgently needed

The government and the ruling Democratic Party of Korea struck a deal on Monday to consider applying the posted housing prices from 2021 in calculating property holding taxes on single-household single-home owners for the next year in a bid to lessen the burden of the comprehensive real estate taxes that skyrocketed on the back of surging housing prices this year. This effectively freezes the current posted housing prices instead of applying new prices next year. A compromise seems to have been reached by “freezing the reference year of taxation” amid the clash between the ruling party that is seeking to postpone the double taxation of transfer income taxes and review the entire system of posted housing prices and the opposition party which pointed out the lack of consistency in real estate policies.

What remains problematic is the fact that the government’s roadmap to raise the posted housing prices up to 90% of the market prices by 2030 is still on route while the rate of comprehensive real estate taxes, which jumped almost twice over as against the previous year, is kept the same. This means the two parties have only agreed to a stopgap measure to avoid the consequences of March when the posted housing prices are expected to rise by more than 20%. Other measures such as postponing the comprehensive housing taxes on single-household single-home seniors and putting a lid on the increase of their health insurance premiums are nothing but a series of ad-hoc policies to assuage voters for the upcoming presidential election next year.

“We believe that it is necessary to make some mild adjustments to the heavy burden on the shoulders of taxpayers by freezing the posted prices for a year,” said Song Yeong-gil, the chairman of the Democratic Party of Korea Monday. Having raised all types of taxations for buying, selling, and holding houses over the past four years and seven months, the government has taken a complete about-face with the big election only 79 days ahead, whose impudence is simply horrifying. According to the Korea Economic Research Institute, the share of property holding taxes against GDP sharply rose from 0.78% in 2017 to 1.22% in 2021.

With the presidential election in the offing, the ruling party’s murky direction of real estate policy is only fueling market confusion. After the news broke out on postponing the transfer income taxes of multi homeowners, the once buoyant housing market in the metropolitan areas is witnessing many homeowners sitting back on the fence and putting a halt to their deals. The housing market, which was slowly recovering its stability, might spiral out of control again should the ruling party continue their frivolity to fiddle with its housing policies.

To make things messier, the patchwork measures from the ruling party – such as the institution of National Land Holding Tax and the increase of effective holding taxes to 1%” – run directly afoul of the campaign pledges of its presidential candidate Lee Jae-myung; voters are confused for the obvious reason. If the lawmakers are genuinely concerned about tax burden, Lee and the ruling party must align their direction of real estate policies first.

12.5년간 세금폭탄 강행하다 선거 앞두고 ‘급 땜질’ 나선 당정 더불어민주당과 정부가 집값 급등으로 폭증한 종합부동산세, 재산세 등 세금부담을 줄이기위해 내년도 보유세를 1가구 1주택자에게 물릴 때 올해 공시가격을 적용하는 방안을 검토하기로 어제 합의했다. 내년 1월 기준으로 정해질 공시가 대신 1년 전 공시가를 기준 삼아 보유세를 사실상 동결하겠다는 것이다. 이재명 대선 후보의 주문을 받아 ‘다주택자 양도소득세 중과 한시 유예’ ‘공시가격 제도전면 재검토’를 밀어붙이려는 여당과 정책 일관성을 강조하며 이에 반대하던 정부가 ‘과세기준 한 해 동결’로 타협점을 찾는 모양새다.

Consistency of real estate policy urgently needed

The government and the ruling Democratic Party of Korea struck a deal on Monday to consider applying the posted housing prices from 2021 in calculating property holding taxes on single-household single-home owners for the next year in a bid to lessen the burden of the comprehensive real estate taxes that skyrocketed on the back of surging housing prices this year. This effectively freezes the current posted housing prices instead of applying new prices next year. A compromise seems to have been reached by “freezing the reference year of taxation” amid the clash between the ruling party that is seeking to postpone the double taxation of transfer income taxes and review the entire system of posted housing prices and the opposition party which pointed out the lack of consistency in real estate policies.

What remains problematic is the fact that the government’s roadmap to raise the posted housing prices up to 90% of the market prices by 2030 is still on route while the rate of comprehensive real estate taxes, which jumped almost twice over as against the previous year, is kept the same. This means the two parties have only agreed to a stopgap measure to avoid the consequences of March when the posted housing prices are expected to rise by more than 20%. Other measures such as postponing the comprehensive housing taxes on single-household single-home seniors and putting a lid on the increase of their health insurance premiums are nothing but a series of ad-hoc policies to assuage voters for the upcoming presidential election next year.

“We believe that it is necessary to make some mild adjustments to the heavy burden on the shoulders of taxpayers by freezing the posted prices for a year,” said Song Yeong-gil, the chairman of the Democratic Party of Korea Monday. Having raised all types of taxations for buying, selling, and holding houses over the past four years and seven months, the government has taken a complete about-face with the big election only 79 days ahead, whose impudence is simply horrifying. According to the Korea Economic Research Institute, the share of property holding taxes against GDP sharply rose from 0.78% in 2017 to 1.22% in 2021.

With the presidential election in the offing, the ruling party’s murky direction of real estate policy is only fueling market confusion. After the news broke out on postponing the transfer income taxes of multi homeowners, the once buoyant housing market in the metropolitan areas is witnessing many homeowners sitting back on the fence and putting a halt to their deals. The housing market, which was slowly recovering its stability, might spiral out of control again should the ruling party continue their frivolity to fiddle with its housing policies.

To make things messier, the patchwork measures from the ruling party – such as the institution of National Land Holding Tax and the increase of effective holding taxes to 1%” – run directly afoul of the campaign pledges of its presidential candidate Lee Jae-myung; voters are confused for the obvious reason. If the lawmakers are genuinely concerned about tax burden, Lee and the ruling party must align their direction of real estate policies first.