President Lee Jae-myung stated on the 14th that ultra-high-value single homes will face increased tax burden through a new bracket for properties above 40 billion won. Lee mentioned '50 billion won' as a threshold he had in mind, leading analysts to interpret that homes around the 50 billion won price point will be the baseline. The proposal aims to enhance tax equity by targeting ultra-expensive properties, with the government planning to finalize the specific threshold and tax rates in its tax reform package at the end of the month following public forums on the 16th and 23rd. The change is expected to affect numerous newly built apartments in Seoul's Gangnam district with floor areas of 84㎡ or larger, where recent transaction prices show properties like Raemian One Valley 84㎡ at 5.95 billion won would be included while Raemian Daechi Palace 84㎡ at 4.4 billion won would be excluded under a 50 billion won threshold.
Government Considers 50 Billion Won Threshold for New Tax Bracket
The government is weighing the creation of a separate tax assessment bracket for homes valued at 40 billion won or more. President Lee Jae-myung directly mentioned that he thought the threshold would be around 50 billion won, signaling that this price range is under serious consideration. Based on recent transaction prices, Raemian One Valley apartments with 84㎡ floor area sold for 5.95 billion won would fall under the new bracket, while Raemian Daechi Palace apartments with the same floor area sold for 4.4 billion won would remain excluded if the 50 billion won baseline is adopted.
Public Survey to Determine Ultra-High-Value Home Threshold
The government decided to conduct a public survey to gather input on the ultra-high-value home threshold. The survey will be available on the 'Real Estate Forum.kr' website and is expected to offer three options: 30-40 billion won, 40-50 billion won, and 50+ billion won. Survey results will be disclosed and discussed at a national real estate forum chaired by President Lee Jae-myung on the 23rd. The government plans to determine the final threshold by comprehensively considering survey results, expert opinions, tax equity, and actual tax burden.
Government Announces Tax Reform Timeline Through Month-End
The government will hold a tax policy forum on the 16th and a national real estate forum on the 23rd. The specific threshold and tax rates for the ultra-high-value home bracket will be included in the tax reform package to be announced at the end of the month. The timeline indicates that uncertainty surrounding the ultra-high-value threshold will continue until the month-end announcement.
Seoul Mayor Proposes LTV Increase for Reconstruction Loans
Seoul Mayor Oh Se-hoon officially proposed to the government eight regulatory relaxation measures, including raising the loan-to-value (LTV) ratio for reconstruction and redevelopment relocation loans from the current 60% to 70%. Oh also proposed expanding the legal maximum floor area ratio for private redevelopment projects to 1.2 times the current level and easing restrictions on transferring union member status. The proposals are based on the fact that private sector accounts for over 90% of Seoul's housing supply, with reconstruction and redevelopment projects expected to generate a net increase of 85,000 units by 2031. For private rental housing, Oh proposed relaxing LTV regulations for purchase-type private rental business operators and excluding them from comprehensive real estate tax aggregation.
Bank Deposit Rates Rise 0.69 Percentage Points Since April
Shinhan Bank raised its one-year fixed deposit rate from 3.0% to 3.2%, joining other commercial banks in adjusting deposit rates upward. The average rate for 12-month fixed deposits at savings banks rose from 3.24% in April to 3.93% on the 13th, an increase of 0.69 percentage points. CK Savings Bank and Pepper Savings Bank offer rates reaching 4.45%. The yield on five-year government bonds also increased from 3.436% at the end of January to 4.041% on the 13th, a rise of 0.605 percentage points.
FAQ
What threshold did President Lee Jae-myung mention for the new ultra-high-value home tax bracket?
President Lee Jae-myung stated on the 14th that the government is considering a new tax bracket for homes valued at 40 billion won or above, and he mentioned that he thought the threshold would be around 50 billion won. The government will finalize the specific threshold in its tax reform package at the end of the month after public forums on the 16th and 23rd.
What is Seoul Mayor Oh Se-hoon's proposal regarding reconstruction loan regulations?
Seoul Mayor Oh Se-hoon officially proposed to the government on the 14th to raise the loan-to-value ratio for reconstruction and redevelopment relocation loans from the current 60% to 70%. He also proposed expanding the legal maximum floor area ratio for private redevelopment projects to 1.2 times the current level and easing restrictions on transferring union member status.
How much have savings bank deposit rates increased since April?
The average rate for 12-month fixed deposits at savings banks increased from 3.24% in April to 3.93% on the 13th, representing a rise of 0.69 percentage points. Some institutions such as CK Savings Bank and Pepper Savings Bank offer rates reaching 4.45%.
