Property tax reform needs broader overhaul

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Property tax reform needs broader overhaul

Published: 25 Mar. 2026, 00:00

Audio report: written by reporters, read by AI

Apartment price increases in Seoul are slowing, particularly in Gangnam, Seocho, Songpa and Yongsan districts, with price growth in high-end apartments in these areas also noticeably weakening. The photo shows apartments along the Han River in Seoul on March 8. [YONHAP]

The government is again emphasizing the need to strengthen property holding taxes to stabilize housing prices. President Lee Jae Myung said at a Cabinet meeting that real estate speculation is “the worst problem facing Korea” and warned that “the country could collapse” if it is left unchecked. He urged policymakers to prepare comprehensive measures, including tax policy, with no room for gaps.

Earlier, Lee shared an article on social media comparing property tax rates in advanced economies, noting that Seoul’s rates are lower than those in New York and Tokyo. However, the comparison overlooks key differences in tax structures and risks oversimplifying the issue.

Korea’s effective property holding tax rate, at 0.15 percent, is relatively low. But the picture changes when transaction taxes are included. Total property-related taxes amount to 1.0 percent of GDP, exceeding the Organisation for Economic Cooperation and Development (OECD) average of 0.91 percent. When acquisition and capital gains taxes are added, the figure rises to 2.67 percent, more than double the OECD average of 1.27 percent. Comparing only holding taxes creates a distorted view.

Moreover, Korea’s system reflects officially assessed property values annually, meaning holding taxes tend to rise each year. This year, sharp increases in assessed values are already leading to higher tax burdens. Raising holding tax rates further under such conditions risks amplifying market distortions and increasing uncertainty.

International comparisons also require caution. In New York, holding taxes account for a larger share of property taxation, but acquisition and capital gains taxes are relatively low, and assessments are largely based on purchase prices. This differs from Korea, where rising home prices directly increase tax burdens.

Singapore, often cited as a model, operates under a system close to land nationalization. It also exempts capital gains taxes for properties held more than three years, regardless of residency. These institutional differences make simple comparisons problematic.

Simply adopting higher tax rates from foreign cases without considering structural differences is unlikely to be effective. If the goal is to curb speculation, the tax system must function coherently in practice. Strengthening holding taxes requires a comprehensive redesign of the entire property tax framework, covering acquisition, ownership and transfer.

In particular, policymakers must ensure that high transaction taxes do not suppress market activity. Above all, housing supply remains critical. Without sufficient supply, tightening property taxes alone risks worsening distortions in the housing market rather than stabilizing prices.

This article was originally written in Korean and translated by a bilingual reporter with the help of generative AI tools. It was then edited by a native English-speaking editor. All AI-assisted translations are reviewed and refined by our newsroom.