The government will maintain the special market value ratio for property tax burden relief for homeowners this year as well. The tax rates applied based on the published price of dwellings will be in effect for the third consecutive year, since 2023.
The Ministry of the Interior and Safety announced on the 14th that it will legislative notice a revision of the 'Local Government Tax Act Enforcement Decree' containing these details from the 15th until May 7.
This revision includes provisions for continuing to apply the special market value ratio for homeowners. Property tax is calculated by multiplying the published value by the market value ratio, and then applying the tax rate to that amount. The market value ratio is the standard used to determine how much of the published price will be reflected in the tax amount.
The market value ratio has been in place since 2009 and was maintained at 60% until 2021. However, after the sharp rise in published prices in 2021-2022, the government lowered the market value ratio for homeowners from the existing 60% to 45% in 2022. Since then, it has been applied variably based on the published price of dwellings: 43% for those below 300 million won, 44% for 300 million to 600 million won, and 45% for those exceeding 600 million won. This ratio will remain the same this year.
A Ministry of the Interior and Safety official noted, 'Considering the uncertainties both domestically and abroad, as well as the challenging economic conditions for ordinary citizens, we have decided to extend the special market value ratio for homeowners for another year.' According to the ministry, with this measure, property tax for an owned dwelling valued at 400 million won will be approximately 172,000 won, which is about 40% lower than if the special measure were not applied.
Additionally, the government will apply separate property tax assessments for industrial land used in corporate cities located in 89 declining population areas for five years (2025-2029). This land can be subject to a low single proportional tax rate of 0.2%, and comprehensive real estate tax will not apply.
The Ministry of the Interior and Safety plans to apply this revision of the local government tax enforcement decree from this May's property tax assessment. After gathering various opinions during the legislative notice period until May 7, procedures such as examination by the Legislation Office and decision by the State Council will follow.
Han Soon-ki, head of the local government finance department at the Ministry of the Interior and Safety, stated, 'Given the recent challenging economic conditions for ordinary citizens, this revision has been prepared to alleviate the burden of housing costs on the public,' and added, 'We will continue to improve the local government tax system to invigorate the regional economy.'