Professor Kang Sung-hoon from Hanyang University presented proposals for real estate tax reform at a presidential forum on July 23. The government is reviewing a shift in the comprehensive real estate tax system from a 'number of homes'-based structure to a 'home value'-based structure, according to the presentation delivered at the forum chaired by President Lee Jae-myung at KBS annex in Seoul. The current system applies higher tax rates to individuals owning multiple lower-value homes compared to those owning a single high-value property, creating equity concerns that prompted the reform discussion. Professor Kang outlined the proposed changes in a presentation titled 'Issues for Designing Rational Real Estate Tax Policy' at the national forum on real estate policy.
Professor Kang Proposes Value-Based Tax System Shift
Professor Kang diagnosed the current comprehensive real estate tax structure as requiring improvement from a tax equity perspective. "A person owning three homes worth 1 billion KRW each is subject to higher tax rates than someone owning one home worth 3 billion KRW," Professor Kang stated at the forum. He identified the need to discuss applying tax rates based on home value rather than the number of homes owned.
The presentation identified tax burden normalization for ultra-high-value homes as another core task for comprehensive real estate tax reform. "Key issues include whether the tax burden on ultra-high-value homes is at an appropriate level, where to set the standard for ultra-high value, and whether to reflect residence status in tax deductions," Professor Kang explained.
Capital Gains Tax Adjustments Identified as Coordination Point
Professor Kang presented capital gains tax reform directions alongside the property holding tax proposals. "Core issues include whether the tax burden on non-residential homes is appropriate and whether to expand residence deductions in the long-term holding special deduction," he stated, mentioning the need to adjust the deduction system with a focus on actual residence.
The presentation identified the appropriateness of capital gains tax burden on ultra-high-value homes and measures to mitigate the so-called 'lock-in effect' that causes transaction contraction as major tasks. Professor Kang emphasized that holding tax and capital gains tax should be designed together rather than viewed separately. "If holding tax is strengthened in the future, how to harmoniously design and implement capital gains tax for real estate market stability is an important task," Professor Kang stated.
Phased Implementation Approach Emphasized for Market Stability
Professor Kang emphasized phased reform to minimize market shock. "It is important to review transition measures that can minimize market shock and tax resistance together in the process of holding tax reform," he stated at the forum.
The discussion on coordinating holding tax and capital gains tax adjustments will be part of the reform review process, according to the presentation delivered at the presidential forum on July 23.
FAQ
What did Professor Kang propose at the July 23 presidential forum?
Professor Kang Sung-hoon from Hanyang University proposed that the government review shifting the comprehensive real estate tax system from a 'number of homes'-based structure to a 'home value'-based structure. He presented this proposal at a forum chaired by President Lee Jae-myung at KBS annex in Seoul on July 23.
Why does the current real estate tax system require reform according to the presentation?
The current system applies higher tax rates to individuals owning multiple lower-value homes compared to those owning a single high-value property. Professor Kang stated that a person owning three homes worth 1 billion KRW each is subject to higher tax rates than someone owning one home worth 3 billion KRW, creating equity concerns that require improvement.
What approach did Professor Kang recommend for implementing tax reforms?
Professor Kang emphasized the importance of reviewing transition measures that can minimize market shock and tax resistance together in the process of holding tax reform. He stated that if holding tax is strengthened, designing and implementing capital gains tax harmoniously for real estate market stability is an important task.
