A Study on Property Tax Reform by Adjusting the Officially Announced Price of Representative Land
Authors:   Korean Public Land Law Association, Lee Jun-Seo 
Published: September 2022

Among the policies of ‘Real estate normalization’ of the ‘Yoon Suk-Yeol Government’s 120 national tasks’ announced on July 7, 2022, the adjustment of the announced real estate price has an important meaning. This is because this is a common factor related to the reconsideration of the reconstruction surplus profit recovery system and the real estate tax system, and is related to the downward revision of the reconstruction surplus profit recovery system and the reduction of the comprehensive real estate tax. The current government's policy is contradictory to the 'Plan for Realization of Official Real Estate Price' and 'Property Tax Relief Plan' announced by the Moon Jae-In government on November 11, 2020. The real estate price realization plan of the Moon Jae-In government reflects the 50-70% level to 90% of the market price by raising the announced real estate prices such as houses, buildings, and land by 3-4%p a year over 10 to 15 years. it will become a reality. In order to alleviate the burden of property tax while realizing the published price, the property tax rate of houses with a published price of 600 million won or less owned by a single homeowner should be reduced by 0.05%p for each tax base section. The policy for this is complementary. The current government's 'normalization' of the real estate tax system means that the announced real estate price will be returned to the level of 2020, that is, before the realization of the announced real estate price plan. This means that the upper limit will be lowered from 300% to 200% for the 2nd and 3rd homeowners in the adjustment area.
Since the real estate tax consists of taxation on capital gains at the stage of acquisition, holding, and transfer of real estate, the tax burden on the people increases as the published price becomes real. According to the published price reflected up to 90% of the real estate market price, the land, building, and housing prices are evaluated as higher when calculating the property tax or comprehensive real estate tax. However, before denigrating the realization of the official price as a policy intended only to increase revenue or criticizing the ripple effect and side effects, it is necessary to consider the essential meaning of the realization of the official price in the real estate policy of the government. The main purpose of realizing the announced price is to secure the equity of the realization rate by real estate type and to achieve balance by reducing the difference in the market price reflection rate of the announced price by real estate price range. The steep rise in real estate prices, which exceeds income growth, causes problems such as inducing the gap between the rich and the poor, lowering the possibility of homeownership for non-homeowners, focusing on real estate investment rather than labor income, and insufficient social investment due to a decrease in disposable income. The realization of the announced price is also being used as a method to solve the problem of housing supply shortage to some extent by increasing the number of listings in the housing market by increasing the burden on multi-homeowners through an increase in the real estate holding tax.
In addition to the adjustment of the official land price, the increase in the fair market value ratio is an important factor in reforming the real estate tax system. This is because, unlike housing, in the case of land, speculative factors such as price spikes are unclear, so it is a fair method to focus on the official land price and fair market value ratio rather than the tax rate. The property tax has characteristics as a local tax, such as the immobility of real estate and the regional universality of taxation, and the relationship between the benefits of public services provided by local governments and the tax burden is relatively clear.