The standard for comprehensive real estate tax (special property tax) for one household per household has been raised from the current 900 million won to 1.1 billion won. The amendment bill containing these contents was passed at the plenary session of the National Assembly on August 31, and the amendment to the tax law was promulgated at the Cabinet meeting earlier this month. This amendment took effect immediately upon its promulgation. In other words, the base line for tax imposition has now reached 1.1 billion won. Shall we find out the questions related to the estate tax in a question-and-answer format?
▲ The ruling and opposition parties reached an agreement on the 19th of last month to raise the comprehensive real estate tax taxation standard for one household per household to 1.1 billion won from the current 900 million won. Accordingly, the amendment bill of the Democratic Party of Korea, which decided to impose a tax on the top 2% of published prices, was scrapped. The photo is a notice regarding comprehensive real estate tax consultations on the outer wall of a real estate in Songpa-gu, Seoul. [한주형기자]
-When will the new property tax standard take effect?
▷ Since the tax obligation is established in the year in which the law enforcement date belongs, the new tax base will be applied from December of this year.
-How can I check the tax on my house?
▷ The wealth tax is also called the ‘rich tax’. This is because it is only levied on high-end homes. This ‘expensive house’ standard is determined by the published price. The quoted price is different from the market price. It’s usually 70-80% of the market price. You can check the published price of our house on our website’s published price alert.
– How much has the property tax standard changed?
▷ The standard for levying this property tax was from 900 million won on the public announcement. If the amount exceeds 900 million won, a tax is imposed on the excess amount. However, from this year, the standard for one homeowner per household to be taxed has risen to 1.1 billion won. If the published price of a house exceeds KRW 1.1 billion, the tax base is determined by subtracting KRW 1.1 billion from the published price of the house and multiplying it by the fair market value ratio. So, since the disclosure was 1 billion won as of the previous standard, those who paid the tax will not be able to pay the tax from the revised bill this year.
In the past, the servant tax was recognized as a ‘tax paid only by the rich’. However, as house prices soared recently and the average house price in Seoul exceeded 1 billion won, many people became subject to the property tax. As a result, voices calling for raising the property tax standard grew, and the government raised the property tax standard.
-Is the new disclosure price increase standard applied in the joint name of a married couple?
This is a very, very important question. The important thing here is that the amended property tax standard does not apply to a married couple’s joint name. As before, only 600 million won for each couple (total of 1.2 billion won) will be deducted.
-Aren’t the people who share the name of the couple at a disadvantage?
▷ In the past, when the tax base was 900 million won, joint names were advantageous. Since the joint name of a married couple is deducted up to 1.2 billion won (since each couple is deducted 600 million won each), there were many people who chose the joint name to avoid the estate tax. However, this time, the standard of tax for one house per household has been raised to 1.1 billion won, so there is no difference from the joint title of the couple (1.2 billion won).
In addition, single owners of one household and one homeowner can receive tax credits for the elderly and long-term possession, which makes it even more advantageous. Co-owners are not eligible for the seniority and long-term holding tax credit.
-Why is the tax credit for senior citizens and long-term holdings important?
▷The current Tax Act provides tax credits to the elderly, such as △20% over 60 to under 65, △30% over 65 to under 70, △40% over 70, and △home ownership 5 More than 10 years to less than 10 years 20% △10 years to less than 15 years 40% △15 years to less than 50% is deducted as long-term holding tax credit. The combined limit of the two deductions is a whopping 80%.
So, even if I own a house with an official price of more than KRW 1.1 billion, if I receive a tax deduction of KRW 1.1 billion and receive up to 80% of the tax credit for long-term ownership and seniority, the tax I pay will be drastically reduced.
However, in the case of a married couple’s joint name, even if they receive a tax deduction of 1.2 billion won, there is no tax credit for long-term holding or old age, so the larger the excess, the more tax will have to be paid. In other words, there is no separate discount system.
-Which one is more advantageous in terms of tax saving, joint name or single name?
▷ Depending on when you can receive a lot of deductions considering the period of ownership of your house and your age, you should choose a single name or a joint name. However, if I have owned a house for a long time, and I am an elderly person and are subject to the estate tax, it is advantageous to have a single title because it can reduce the tax burden by receiving a certain level of tax credit for the elderly and long-term possession.
For example, according to the results of the simplified tax calculation of the National Tax Service, for a 60-year-old co-owner who owns an apartment with a published price of 1.5 billion won, a single title is more advantageous if the holding period is more than 10 years. Until 5 years of ownership, the tax (101,216 won) in the joint name is lower than that of the single (1.11,160 won), but from the 10th year onwards, the tax (733,440 won) in the case of a single title is significantly lower.
In the case of a joint title of 84㎡ (public price of 2.256 billion won), the expected property tax for this year is 4,362,854 won, which is significantly advantageous compared to 8,15436 won for a single owner. However, as time passes, when the senior citizen deduction or long-term ownership tax deduction exceeds 70%, the sole title becomes advantageous.
-Is a married couple jointly named, can I receive benefits for long-term holding and the elderly?
▷ As house prices skyrocketed, those who chose a joint name have raised their voices saying that it is unfair to be discriminated against in the property tax. The couple is an economic community, so why are they discriminatory to one household and one housekeeper? They are asking for the benefits of long-term holding and senior citizens in joint names. So, at the end of last year, the government and the ruling party revised the tax law so that co-owners can choose to file as sole names. So, starting this year, even a married couple’s joint name can be changed to a single name. The one-family-one-house special case applies.
-1How do I apply for the one-family special case?
▷ In order to apply for a one-family, one-house special case, the person with the largest share of the couple becomes the taxpayer. If the equity ratio is 5 to 5, the taxpayer can be selected. The deduction for senior citizens and long-term ownership is applied based on the age of the taxpayer and the period of ownership of the house. It would be better if the taxpayer is someone who can get more deductions due to the length of time they own the house or the older they are.
Those who want the one-family, one-house special case can apply for hometax (hometax.go.kr) or the local tax office from the 16th to the 30th. On the Hometax website of the National Tax Service, go to the main form of comprehensive real estate tax, download the application form, fill in the blanks and submit to the tax office. At this time, you must submit a copy of the marriage relationship certificate to prove your marriage. Once an application has been submitted, it will remain as it is unless otherwise requested.
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