Increasing Property Tax Rates in Güney Kore Could Double Taxes

The real estate tax reform package that the Güney Kore government plans to announce at the end of this month is expected to significantly increase the financial burden on property owners nationwide. New analyses detail what the consequences would be if the 'fair market value ratio', which forms the basis for calculating the comprehensive property tax (Jongbu-tax), is increased from the current 60 percent to 80 percent. In such a scenario, the annual property tax paid by an average homeowner is predicted to nearly double. This situation stands out as a development that will directly affect citizens living in Seul and surrounding areas who own high-value housing. The government's move is considered part of its goals to balance market conditions and ensure tax fairness, but it has already caused serious concerns among property owners.

According to data presented by the Ulusal Meclis Bütçe Politikası Ofisi and shared by Ulusal Meclis Üyesi Lee Jong-wook, the effects of raising the rates on the state budget are quite striking. With the current 60 percent fair market value ratio applied, housing-based property taxes to be collected in 2026 are estimated to be approximately 8 trillion 699 billion won. However, if this ratio is raised to 80 percent, total tax revenue will reach 10 trillion 658 billion won, recording a 15.7 percent increase. If the government pulls this ratio more aggressively to 95 percent, the total revenue is expected to reach 10 trillion 772 billion won, increasing by 23.8 percent. These numerical projections clearly show that even small changes in tax rates can create massive effects on the state's general budget revenues.

The fair market value ratio in question functions as the most critical multiplier used in converting the official values of properties into a taxation base. In the past, during the Moon Jae-in government, this ratio was increased from 80 percent to 95 percent, creating a heavy tax burden on property owners. However, the current Yoon Suk-yeol administration, at the beginning of its term, chose to reduce this ratio to a relatively low level of 60 percent to ease the tax burden on citizens. The new reform package now on the agenda strengthens the impression that the policy might shift back towards the old and heavy taxation system. Why the government is now considering increasing this ratio again has reignited debates on economic balances and tax fairness.

The implications of increasing tax rates at the individual level also seem to be highly striking. According to 2024 data, there are approximately 455 thousand 331 people paying comprehensive property tax in the country, and the average amount paid by these individuals is currently around 3 million 240 thousand won. If the fair market value ratio is updated to 80 percent, the average tax burden per person will skyrocket to 6 million 240 thousand won, which is exactly a 1.9-fold increase. If the scenario goes further and the ratio is raised to 95 percent, the average property owner will have to pay 7 million 800 thousand won; this means a full 2.4-fold increase compared to the current situation. Such high and sudden tax increases carry the potential to create a serious financial pressure, especially on retired citizens and fixed-income groups.

When evaluated regionally, Seul, the capital of the country, and the Gyeonggi region surrounding it will be the most affected places by this tax increase. If the fair market value ratio is increased to 80 percent, the annual property tax collected only for housing in the Seul region will jump from the current 4 trillion 519 billion won to 5 trillion 472 billion won, an increase of 21.1 percent. If the same ratio is raised to 95 percent, the total tax burden in Seul will reach 5 trillion 959 billion won, experiencing a massive 31.9 percent increase. The Gyeonggi region will share a similar fate; in the 80 percent scenario, the regions' tax burden will increase from 2 trillion 377 billion won to 2 trillion 258 billion won, while in the 95 percent implementation, this figure is expected to reach 2 trillion 370 billion won and record a 16.3 percent increase. This concentrated financial pressure will directly and deeply affect citizens in metropolitan areas where the population and the high-value real estate market are most centralized.