The government has decided to shift its real estate tax policy from a focus on ownership to one centered on residency. This change aims to reduce tax benefits for homeowners who do not actually reside in their properties and to adjust excessive deductions for ultra-high-value homes priced at 4 billion to 5 billion won. The policy clarifies whether homes should be viewed as places of residence or as investment assets that can be held while minimizing taxes.
There has been considerable backlash against the reduction of benefits for non-resident homeowners. However, not all homeowners are actual users of their properties. If someone owns a home while living elsewhere for an extended period, it is reasonable to view that property as serving both residential and investment purposes. There is no justification for providing the same tax benefits to those who do not actually reside in their homes.
Of course, there are unavoidable circumstances that may require individuals to leave their homes, such as job relocations, schooling, medical treatment, or caring for parents. The government has stated that these non-resident periods will be recognized as actual residency. Criticizing the policy as merely a “tax increase for homeowners” without acknowledging these exceptions implies a demand for continued tax benefits on investment gains from properties that are not actually lived in.
Another contentious issue involves elderly long-term residents. Critics argue that imposing high property taxes on seniors with no income, simply because their lifelong homes have appreciated significantly, amounts to forcing them out of their residences. Situations where individuals must sell homes they have lived in for many years due to tax burdens must be handled with care. Therefore, safety measures such as deferring payments for low-income seniors are necessary, and the government has indicated it will expand these provisions.
However, it is important to distinguish between a lack of cash income and a lack of assets. It is difficult to classify someone who owns a property valued at over 4 billion won as economically disadvantaged solely based on low monthly income. Selling such a home could yield assets that would take a worker decades to accumulate. Describing this situation as being “driven out by taxes” oversimplifies the reality.
Moreover, real estate prices have risen significantly due to broader societal investments in urban development, transportation, education, and commercial facilities. The dramatic increase in property values in areas like Gangnam and along the Han River is not solely the result of individual homeowners' efforts. It cannot be deemed abnormal taxation to require a reasonable level of property tax on homes that have appreciated significantly in value.
Cities must continue to evolve. As jobs and commercial facilities cluster in certain areas, property values rise, attracting individuals willing to bear those costs to live and work there. It is natural for retirees to consider downsizing or relocating as their income and lifestyle change. While the government should not force such moves, it also should not guarantee the right to hold onto high-value properties at low costs for a lifetime.
The key is balance. Seniors who have lived in their homes for a long time should be protected from sudden tax burdens that are difficult to manage. Options such as deferring payments or settling taxes upon the sale of a home are viable. However, this protection should not serve as a justification for continually lowering taxes on ultra-high-value properties.
There are points to consider in the government's proposed reforms. The pace of tax increases should be moderated to avoid sudden burdens, and the criteria for residency exceptions must be clearly defined. The belief that taxes alone can control housing prices should also be approached with caution. Above all, an increase in supply must accompany these measures.
However, claims that “non-resident homeowners should be protected” or that “elderly homeowners with high-value properties will be forced out due to tax increases” are separate issues. Returning homes to their intended use as residences and imposing appropriate taxes on high-value assets is the starting point for normalizing the real estate tax system. Exceptions should be made for protection, but principles should not be compromised.
* This article has been translated by AI.
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