The comprehensive real estate holding tax is a type of tax introduced as part of socioeconomic policy. Its purpose is to impose tax on the owners of high-value real estate and improve equity in the tax burden. As a result of changes in the economic environment, the median house price in Seoul stands at KRW 800 million. Whether it is reasonable to tax high-value houses whose publicly announced price is KRW 900 million must be reviewed. A publicly announced price for a house is intended to estimate a suitable price; by its inherent nature, the market value of a house differs from its publicly announced price. The method used to estimate the publicly announced price of each individual house has not been disclosed. A rapid rise in the publicly announced price increases the tax burden on actual residents; a transfer of income tax is imposed on realized profits and has a non-taxation provision for actual residents. On the other hand, the comprehensive real estate holding tax, which is imposed on non-realized profits, does not have a non-taxation provision in national taxation. With changes in the economic environment, it is necessary to review whether the tax base should be revised upward. Furthermore, improvements should be made with regard to double taxation via property tax and transfer tax.
The purpose of this paper is to review whether the rationalization of the publicly announced price for houses improves the tax equity of the comprehensive real estate holding tax. Increasing the publicly announced price in a particular area could undermine tax equity and impose greater tax burden on beneficial owners.
Tax imposed on temporary 1-household 2-house owners by regarding them as high-value real estate owners, as well as a tax base that does not take debt into account, should be reconsidered in terms of tax burden equity. In the future, it would be better to disclose the procedures used to estimate a house’s publicly announced price and to improve the comprehensive real estate holding tax on actual residents in a way that maintains tax burden equity. It is difficult to find evidence that taxation has stabilized housing prices in an area that lacks supplied houses. It will be important to revisit whether the purpose of taxation has been achieved and improve the way the tax base is estimated in accordance with changes in the market environment.