Ultra-Premium Single Homes Face Up to 36% Property Tax Jump at 3 Billion Won Threshold

*Editor's Note: 'AI PRISM' (Personalized Report & Insight Summarizing Media) is an "artificial intelligence (AI)-based customized news recommendation and summary service" developed with support from the Korea Press Foundation. It selects and provides six customized news items by reader type.

1. The Moment You Cross the 'Ultra-Premium' Threshold... Even Single-Home Owners' Comprehensive Real Estate Tax Jumps 30%

Key Summary: A simulation of the heavier taxation plan for single homes with a published price exceeding 3 billion won, applied to 10 high-priced Seoul apartments, showed the tax burden increase rate reaching 21.6% to 36.4%. For the 84.97-square-meter unit at Acro River Park in Seocho-gu, with a published price of 3.934 billion won, the combined comprehensive real estate tax and special rural development tax would rise by 6.01 million won, from 18.57 million won to 24.58 million won, while the 235.31-square-meter unit at Hannam The Hill in Yongsan-gu would surge by 24.70 million won, from 67.84 million won to 92.54 million won, with the comprehensive real estate tax burden expected to approach 100 million won. However, experts predicted that because the capital gains tax burden often reaches tens of billions of won, a considerable number of owners will choose to hold out rather than sell, even if the property tax rises.

2. Presidential Office: "If Property Tax Is Strengthened, an Exit Path for Multi-Home Owners... Tax Cuts for Provincial Relocation After Retirement"

Key Summary: The Presidential Office said it is reviewing, in parallel with strengthening property taxes, the preparation of an exit path to induce multi-home owners to put properties up for sale. Kim Yong-beom, director of the Presidential Office's Policy Office, introduced several opinions raised, including setting a ceiling on the long-term holding special deduction, measures to incentivize multi-home owners to sell, and measures to ease the tax burden for those relocating to provincial areas after retirement. The government plans to disclose the tax reform plan late this month or early August following a second national public debate, and Ha Joon-kyung, the Presidential Office's senior secretary for economic growth, said measures on jeonse and monthly rent will also be announced soon.

3. [Exclusive] Ruling Party, Party-Government Meeting on Tax Reform Plan on the 30th... Final Coordination on Property Tax and More

Key Summary: The Democratic Party of Korea and the government will hold a closed-door party-government meeting at the National Assembly at 8 a.m. on the 30th to finalize the second-half tax reform plan. From the National Assembly, lawmakers belonging to the Democratic Party's Policy Committee and the Finance and Economy Planning Committee will attend, while from the government, Koo Yun-cheol, Deputy Prime Minister for the Economy and Minister of Finance and Economy, and others are expected to participate. The key points at issue are the shift in the basis of comprehensive real estate taxation from the number of homes to the combined value of housing assets, the finalization of the ultra-premium housing standard, and the levels of gradual property tax strengthening and transaction tax easing.

4. "The Concentration on One Prime Home May Ease... But Listing Lock-Up Could Deepen"

Key Summary: Real estate experts predicted that strengthening property taxes on ultra-premium homes will put a brake on the price uptrend centered on Gangnam's three districts and the Han River belt. Park Won-gap, chief real estate specialist at KB Kookmin Bank, analyzed that "moving up to a higher-grade location will not be easy over the next one to two years." However, Ko Jun-seok, a professor at Yonsei University's Sangnam Institute of Management, warned that strengthening only property taxes without an exit path such as transaction tax cuts could deepen the listing lock-up through holding out, and observers also raised the view that unless the supply shortage is resolved, market instability will persist as buying demand flows into lower- and mid-grade locations or high-priced apartments below the ultra-premium standard.

5. Gathering Sites Including Seoul Procurement Office and Cheongdam High School... Urban Complex Development to Speed Up

Key Summary: The government plans to include in the upcoming housing supply measures a plan to convert into housing land three public sites—the Seoul Regional Procurement Service site in Seocho-gu, the LH Yeouido site, and the former Gwangjin-gu Office site—as well as sites of closed and relocated schools such as Cheongdam High School in Gangnam-gu and Gonghang High School in Gangseo-gu. It is reviewing 13 unused school land sites, including seven closed schools in Seoul, as supply candidate sites, and the public offering for urban public housing complex project candidate sites received resident proposals totaling 44 sites and about 60,000 households. The urban complex project is a method in which the public sector participates as an operator in station-influence areas or aging low-rise residential zones to shorten the supply period, and it is reported that candidate site proposals were received for the first time this time from Gangnam's three districts as well.

6. It's a Solution for Youth Housing... But Ultra-Long-Term Fixed-Rate Mortgage Loans Fall Through Amid High Interest Rates

Key Summary: The launch of a 40-year fixed-rate mortgage loan product, which had been discussed as a measure to ease the burden of home ownership for young people, is at risk of collapse as a surge in interest rates and issues with total household loan volume regulations overlap. Shinhan Bank had announced a launch in the second half of this year but has not been able to confirm the timing, and the Financial Services Commission has also suspended operation of its task force (TF) for revitalizing long-term fixed rates. As the upward trend in interest rates continues, with the three-year treasury bond yield renewing its annual high at 3.959% on the 24th of this month, the share of fixed rates among newly handled mortgage loans fell to 41.6% in May this year, the lowest in five years since June 2021 (39.5%).