Homeowners in Han River Belt Face Dilemma Amid Tax Reforms

Homeowners of non-residential single homes in the Han River Belt, including Mapo and Seongdong districts, are grappling with complex decisions regarding ownership, sales, and actual residency following recent tax reforms. While the reforms expand the basic exemption for resident homeowners, non-residents face increased tax burdens. With lending restrictions limiting buyer activity, many find it challenging to sell or rent their properties.

According to real estate agencies in the Mapo area, inquiries from non-resident homeowners about selling and moving in have surged since the announcement of the tax reform.

The Mapo Raemian Prugio, a prominent complex with 3,885 units, has seen recent transactions for its 59-square-meter units priced between 2.1 billion and 2.2 billion won, while 84-square-meter units are selling for 2.4 billion to 2.6 billion won. This area has been noted for its lower price burden compared to Gangnam and its accessibility to the city center, attracting demand for what is referred to as 'less desirable' properties. However, there has been a noticeable increase in consultations from non-resident homeowners regarding property sales.

A representative from a local agency stated, "A homeowner residing in Pyeongtaek, who owns a single property here, came in worried about taxes. They find it difficult to leave their existing community, and selling their home to buy another would incur acquisition taxes and brokerage fees, making it hard to decide."

Under the new tax reform, the basic exemption for resident homeowners has increased from 1.2 billion won to 1.4 billion won, while non-residents are subject to a 900 million won threshold. Homes with a publicly assessed value exceeding 900 million won but below 1.2 billion won may now be subject to taxation, and properties valued over 1.2 billion won will face increased burdens due to reduced exemptions and higher market value ratios.

According to Woo Byung-tak, a specialist at Shinhan Premier Pathfinder, if the rate of increase in publicly assessed values for apartments in 2027 is assumed to be half of this year's rate, the property tax for a non-resident homeowner with an 84-square-meter unit in Mapo Raemian Prugio, valued at approximately 1.75 billion won, is projected to rise from 4.16 million won this year to 6.17 million won next year, marking a 48.2% increase. Similarly, the tax for an 84-square-meter unit in Seongdong's Raemian Oksooribujeon is expected to increase from 4.52 million won to 8.63 million won, a 90.7% rise.

These figures reflect the combined impact of the tax reform and rising assessed values, with actual property taxes varying based on assessed values and exemptions.

A representative from a local agency in Okso-dong noted, "Homeowners living outside the area are inquiring whether they are subject to taxation. Many prefer to wait and see the actual amounts they will owe and the buyer demand before listing their properties."

Even for those choosing to sell, demand remains insufficient. Homes priced around 2 billion won require significant personal funds due to limited loan amounts, and potential buyers looking to move to Mapo or Seongdong must first sell their existing homes.

A representative from an agency near Seongdong's Centras commented, "Even if homeowners list their properties due to taxes, the limited loan amounts mean there aren't many buyers. How many buyers have around 2 billion won in cash?"

Homeowners unable to sell are also considering moving in themselves. A representative from a Mapo Raemian Prugio agency mentioned, "A homeowner with a lease contract until 2027 asked if they could sell without showing the interior since the tenant isn't allowing viewings. Some homeowners are considering moving in if selling proves difficult."

Nam Hyuk-woo, from Woori Bank's real estate research institute, stated, "It is unlikely that demand will quickly concentrate in the Han River Belt immediately after the tax reform. Those looking to upgrade must first sell their existing homes, which means the entire market is interconnected and will inevitably slow down together."