The Seoul Metropolitan Government said regarding the recent decision by the Tax Tribunal to unreasonably cancel the additional tax on high-end housing for 'Nine One Hannam' in the Hanam-dong area of Yongsan District, 'It is necessary to amend the relevant standards to fit reality.'
On the 16th, the Seoul Metropolitan Government released a comment through Spokesperson Shin Seon-jong, stating this.
According to the Seoul Metropolitan Government, the Tax Tribunal recently ruled in favor of Daesin Property, the implementing company of Nine One Hannam, in its appeal against the additional acquisition tax imposed by the city. The tribunal accepted the developer’s argument that Nine One Hannam does not qualify as high-end housing under local government tax laws and that imposing the additional acquisition tax is unreasonable.
Nine One Hannam consists of 124 units of 244 square meters dedicated penthouses and 43 units of 273 square meters duplexes. Each unit is said to have designated parking and storage. The recent transaction price has exceeded 10 billion won.
According to current regulations, high-end housing is defined as dwellings that exceed a total floor area of 245 square meters (274 square meters for duplexes) excluding common areas, and a standard market value of 900 million won. Under this regulation, if a dwelling qualifies as high-end housing, an additional acquisition tax rate of 8% is applied to the general tax rate (2.8% to 4%), resulting in a total acquisition tax rate of 10.8% to 12%.
However, the Seoul Metropolitan Government determined that Nine One Hannam should be regarded as a target for additional taxation, considering the nature of acquisition taxes. They cited that acquisition taxes are based on the 'substantial taxation principle,' which considers the actual usage status along with the formal criteria of the acquired object. Based on this, they argued that the underground parking lots and storage spaces, which are provided exclusively to individual units through installed barriers, are considered exclusive spaces for residents.
In contrast, the Tax Tribunal ruled that there was no separate definition of common areas in local government tax legislation. They also determined that based on official documents such as the real estate register or the building management register, parking and storage spaces are considered common areas.
In response, the Seoul Metropolitan Government noted, 'The Tax Tribunal did not even conduct an on-site investigation of the dwellings,' and explained that 'developers are constructing houses that barely fall short of the high-end housing area criteria to avoid additional acquisition taxes, and are marketing them with exclusive parking and storage areas separately provided for each unit.'
They further stated, 'Common areas refer to spaces that multiple units share; therefore, we cannot accept the claim that parking and storage areas that are solely used by one unit are common areas.'
The Seoul Metropolitan Government also mentioned that the current high-end housing criteria are disconnected from reality. This is because the average official price of approximately 396,000 units, which corresponds to about 14% of the total apartments in Seoul last year, exceeded 900 million won.
In light of this, the Seoul Metropolitan Government stated, 'Currently, a bill to amend the local government tax law, which stipulates that criteria for the additional taxation of high-end housing should only be based on value rather than area, has been proposed in the National Assembly,' adding, 'It is time to revise the regulations regarding additional taxation on high-end housing to fit reality.' They also noted, 'We will actively express our opinions during the legislative process.'
The Seoul Metropolitan Government further stated that the system preventing administrative agencies from contesting the Tax Tribunal's decisions is unreasonable and requires re-examination.