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South Korean Homeowners Win Property Tax Court Case

by Mary Swire, Tax-News.com, Hong Kong

30 December 2008


South Korean high-end home owners will benefit from tax rebates and tax changes from December 26 following a ruling from South Korea’s constitutional court, which ruled that property tax, first levied in 2005, is unconstitutional.

The court found that the tax in question, the Comprehensive Real Estate Tax Act, which was levied on the aggregate property value held by all household members, not an individual basis, discriminated against married couples and was therefore unconstitutional.

The South Korean government has therefore had to implement a ‘fairer’ property tax system and refund KRW900bn (USD674m) to the taxpayers, of which KRW270bn (USD202m) is yet to be paid out.

In addition to the refund those who have owned their property for five or ten years will receive 20% or 40% of this year’s all inclusive tax payments as a refund, respectively.

From December 26, the highly progressive tax system will be replaced and will no longer charge higher rates to older citizens; homeowners between the ages of 65-70 will see their property tax rate fall by 10%, those aged between 70-75 will see a fall in the levy of 20%, and those over 75 will be taxed 30% less.

In a statement, the South Korean Finance Ministry said:

"With the ruling, luxury home owners are expected to get KRW200bn in tax refunds for 2006 and KRW400bn in such refunds for 2007, large property holders are likely to save KRW500bn in the tax for this year."


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