How South Korea's property tax will change in 2 years: W5b homeowners face 39% hike

South Korea's comprehensive real estate tax, known as "jongbusae," is set for a major overhaul starting next year, with owners of homes valued above 3.5 billion won facing a heavier tax burden. While the expansion of the basic deduction will reduce the tax on homes in the 2 billion to 3 billion won range, properties valued at 4.6 billion won or more are expected to see sharply larger increases as rate hikes compound the effect.

According to the Ministry of Economy and Finance's 2026 tax reform plan, released Monday, the comprehensive real estate tax rate for single-homeowner households will rise from the current 1.0% to 1.3% next year for the taxable base bracket of 600 million to 1.2 billion won. The threshold for being subject to the tax will be raised from a publicly assessed value exceeding 1.2 billion won to one exceeding 1.4 billion won, and the fair market value ratio will increase from 60% to 70%.

The comprehensive real estate tax is calculated by subtracting the basic deduction from the publicly assessed value, applying the fair market value ratio to arrive at the taxable base, and then applying the applicable bracket rate and progressive deduction. Additional tax credits based on age and length of residency are applied afterward.

Excluding additional deductions and assuming a publicly assessed value realization rate of 69% for an owner-occupant with a single home, properties valued at 3.4 billion won or less are estimated to see their comprehensive real estate tax actually fall after the reform. Although the tax rate rises for the bracket above a 600 million won taxable base — corresponding to homes valued at roughly 3.2 billion to 3.3 billion won — the expansion of the basic deduction to 1.4 billion won is expected to largely offset the rate increase.

The tax burden is estimated to begin rising in earnest for homes valued at around 3.5 billion won, with the increase accelerating sharply for properties at around 4.6 billion won. A home valued at 4.6 billion won currently falls in the 600 million to 1.2 billion won taxable base bracket and is taxed at 1.0%, but next year its taxable base will move up to the 1.2 billion to 2.5 billion won bracket, pushing the applicable rate to 1.5%. In 2028, the rate for that same bracket will rise further to 2.0%, marking two consecutive years of 0.5 percentage point increases.

As a result, the comprehensive real estate tax on a 4.6 billion won home is estimated to rise 27.4% from current levels next year and 29.6% by 2028. Higher-priced homes will see even steeper increases. For a home valued at 5 billion won, the tax is projected to rise 29.2% next year and 39.4% by 2028 — a jump of more than 10 percentage points in the rate of increase within a single year.

The government said the reform will exempt owner-occupants of a single home from the comprehensive real estate tax on properties valued at up to around 2 billion won. The expansion of the basic deduction will reduce the share of apartment units subject to the tax from the top 3.1% of all units, or 487,000 homes, to 2.3%, or 363,000 homes.

Homes in the 2 billion to 3 billion won range — the top 1.1%, or about 168,000 units — are expected to see their comprehensive real estate tax fall, while those in the 3 billion to 4 billion won range — about 103,000 units, or the top 0.7% — are projected to see little change in their tax burden, with some seeing a modest increase or decrease.

For apartments valued above 4 billion won — about 65,000 units, or the top 0.4% — the government's policy is to normalize taxation. In effect, the reform concentrates heavier tax burdens on ultra-high-priced homes that rank in the top 0.4% of all apartment units nationwide by price.

Based on the number of comprehensive real estate taxpayers last year, a rough calculation suggests the tax burden will increase for about 80,000 people — roughly 16.6% of the 480,577 taxpayers subject to the levy and about 0.5% of the approximately 15.98 million homeowners nationwide.

In a simulation by the Ministry of Economy and Finance using the case of a 60-year-old single-homeowner who has lived in the property for 10 years — qualifying for a 60% combined age and residency deduction — the comprehensive real estate tax fell for homes valued up to 3 billion won.

For a home valued at 3.5 billion won, however, the tax rises about 10.7%, from the current 1.92 million won to 2.12 million won both next year and in 2028. A 4 billion won home sees an increase of 23.8%, from 2.63 million won to 3.25 million won. For a 5 billion won home, the tax climbs 35.4% to 6.15 million won next year, then surges to 9.79 million won in 2028 — roughly 2.2 times the current level.

For non-resident owners, the increases are even steeper. A 60-year-old who has held a single home for 10 years without living in it will see the effects of a reduced residency deduction and the elimination of the holding-period deduction. On a home valued at 2 billion won, the comprehensive real estate tax is projected to jump from 276,000 won to 1.14 million won next year and 1.52 million won in 2028 — about 5.5 times the current level.

Under the same conditions, the tax on a 3 billion won home is estimated to reach 4.25 million won in two years — 4.7 times the current level — while a 5 billion won home would reach 19.7 million won, a 4.3-fold increase.

Multi-home owners will also face a heavier burden. Those holding three or more properties will be affected by, among other changes, the fair market value ratio rising from the current 60% to 80% by 2028. For an owner of three homes of equal value who lives in one of them, the comprehensive real estate tax on a 2 billion won home is projected to more than triple, from the current 1.27 million won to 4.42 million won in two years.

Over the same period, the tax on a 3 billion won home is estimated to rise roughly threefold, from 3.14 million won to 9.51 million won, while a 5 billion won home would see its tax climb about 2.2 times, from 15.67 million won to 34.38 million won.

The actual comprehensive real estate tax burden will vary, however, depending on the number of properties held, the length of residency and ownership, and the publicly assessed value. The Ministry of Economy and Finance noted that because the tax is assessed on an individual basis, personal deduction conditions differ and there are limits to making uniform estimates.