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A study on the Realization Plan of Extension Period of Comprehensive Real Estate Tax Summation Exclusion

  • Public Land Law Review
  • Abbr : KPLLR
  • 2020, 91(), pp.163-181
  • Publisher : Korean Public Land Law Association
  • Research Area : Social Science > Law
  • Received : July 31, 2020
  • Accepted : August 21, 2020
  • Published : August 27, 2020

Lim, Suk-Nyeo 1,  Lee， Doo-Sang 1

1남서울대학교

Accredited

ABSTRACT

In order for fairness of the taxation burden to be reconsidered, Korea’s real estate holding tax is collected after being differentiated into national comprehensive real estate tax and local property tax. Of the total comprehensive real estate tax for declared property held, a deduction amount is imposed in cases exceeding the following: \600 million for housing held (\900 million for 1st generation single households), \500 million for landed estate, and \80 billion for separate combined landed estate. However, according to recent statistics, the average sale price for apartments in Seoul exceeds \925 million. Additionally, the government’s real estate measures (released on July 10th, 2020) to stabilize housing market transactions had the objective of easing the tax burden on 1st generation house owners, while cutting off the speculative demands of corporations, multi-homeowners, and others. However, it is still possible to apply for summation exclusion on existing comprehensive real estate tax. In cases limited to where a summation exclusion on comprehensive real estate tax is reported, the taxable subjects are excluded, however for the real estate market in Seoul and areas outside of the capital, even after the deadline of the fixed period, in cases where the residing generation fails to sell the lot, there is the burden of interest on secured loans as collateral for the unsold lot, as well as management fees on the unsold lot. When summation exclusion occurs, comprehensive real estate tax is imposed according to whether the grace period has expired. In relation to undesirable unsold lots, an extra comprehensive real estate tax is imposed in accordance with the expiry of an extended time limit (5 years). It is a valid fact that developing work is obligated to pay for itself, however the difficulties of the operations of housing contractors could bring with them the effect of increasing house prices of pre-sold and re-sold lots, which could be seen as a prediction of permanent difficulties in terms of the stability of residential life for its citizens. With the above in mind, this study will make suggestions relating to the necessity for the introduction of a system applying a 5% increase (maximum) to the initial sale price in cases where housing constructors re-sell an unsold residence, instead of providing the taxation benefit of extending the –grace period by one year each time a summation exclusion is reported (in cases where unsold lots are held). There is adequate necessity for both the regulation of the real estate market and easing of policies which has been caused by various events affecting current society. However, there is now a necessity for the introduction of a system fitting with the current situation. The reduction of the house buying price burden for actual consumers, bringing about the stability of residential life for citizens, and reducing unsold lots in the localities, (as well as small/middle sized cities) will promote an eventual advancement of the real estate market, and the development of the national economy.

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